20%

[c c]

When CART was being formed I suggested a couple of fundraising ideas. They didn't accept them for various reasons but I still sometimes wonder about one of them and having just handed over in excess of £1,000 for boat licenses I notice 20% of it is VAT which goes to the government.

 

Every time CART receives income from Rent and Licenses, they give away 20% to the government in VAT. Yet according to HMRC, these items are exempt from VAT - unless CART themselves chose to add it to their Rent and Licence fees.

 

When they were BW I was told that it was so that they could claim back the VAT on property repairs but it seemed to me that they would have to do an awful lot of repairs in order to make that worthwhile.

 

And the Fundraising idea? - Place Rent and License under a different category with HMRC so that they don't charge us VAT and don't pay VAT - raise our boat licence and property rent fees by 10% and we say thank you CART for saving us 10% each year.

 

I would love to know the figures of

i) how much the government receives from us through this charge against how much the give CART in grant aid.

ii) how much CART receive in VAT on property repairs against how much they give away in VAT on Rent and Boat Licenses.

Edited August 24, 2013 by canalchef

[adam1uk]

The VAT question seems to come up every six months or so. From this thread from earlier this year:

 

VAT – Boats and boating
Why does the Canal & River Trust charge VAT on boat licences?
Firstly it is important to understand how VAT applies to a business. The Trust is required by legislation to be registered for VAT. If you are registered for VAT you must charge VAT on all of your supplies where the law requires it.
A VAT registered business regularly completes a VAT return in which it pays to HM Revenue & Customs all of the VAT it has collected from customers and reclaims all of the VAT it has incurred on goods and services it has acquired.
However it is only possible to reclaim any VAT incurred if the VAT can be attributed to taxable business activities. The majority of all expenditure on the general maintenance and major repairs of the canal infrastructure includes VAT.
Prior to 1989 British Waterways (BW) did not charge VAT on its boat licences and as a result was unable to recover VAT on its general repairs and maintenance of the canals.
In 1989 BW opted to charge VAT on its property including canals to enable it to generate taxable activities (including charging VAT on the boat licence) on the canals, which in turn enabled BW to recover the VAT incurred on general maintenance and refurbishment.
At the time BW did not increase the overall cost of the boat licence to the customer. If for example the licence at the time cost £300, after BW opted to charge VAT the licence still cost £300 (£255+ £45 VAT). In other words this cost was not passed on to BW’s customers.
The Trust has continued to apply the same options to charge VAT.
Without this option to charge VAT on the boat licence, at today’s level of expenditure on the canal infrastructure, the Trust would be losing up to £20 million per annum in lost VAT on the general and major repairs, and the price of the boat licence and other income streams would need to be increased by a significant amount to offset this loss.

 

[Sir Nibble]

So the revenue from VAT claimed back is also a contribution by boaters!

[c c]

And that quote from adam1uk above goes on to say:

 

Why doesn’t the Environment Agency charge VAT on their Boat Licence
The EA has a special exemption in VAT legislation that allows them to reclaim the VAT suffered on work carried out on their waterways. This means it does not need to make the same election as the Trust. Many years ago a BW request to HM Treasury for BW to have the same special exemption as the EA was rejected. This is why the VAT position for the two licences is different between the two authorities.

My point to CART at the time was as you are now a registered charity rather than a qango, could they not put in a request to HM Treasury again.