Churches’ predicament over VAT

by
18 April 2012

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From the Revd Paul Payton and others

Sir, — The outcry against the im­position of VAT on alterations and new work in listed buildings is understandable, but your report (News, 30 March), while noting that the Listed Places of Worship (LPW) grant scheme will be extended to cover them, fails to mention the very serious problems that the scheme now presents to many churches involved in repairs con­tracts and on the English Heritage (EH) “At Risk Register”.

Churches with a small congrega­tion, limited means, and no reserves have been put in a position where it is impossible to know how much of the VAT will be repaid. The LPW scheme now works on the basis of sharing out available money be­tween all applicants in a particular quarter. This means that the per­centage repayment cannot be known until after the work has been done and paid for and the application made for rebate.

Most churches in a repairs con­tract with EH will be seeking matched funding. The problem is that grant-making trusts, and EH itself, are making different assump­tions about the amount to be re­paid. Some trusts assume 100-per-cent reimbursement of VAT when calculating grants, others 75-per-cent, others 50-per-cent.

This means that it is impossible to present available capital ac­curately to potential funders, and cash-flow problems become a night­mare for treasurers, as the reimburse­ment can vary substan­tially from quarter to quarter. The percentage repayments over the past year or so have varied from 74 per cent to 46 per cent of the VAT paid out.

The official guidance says: “The scheme will operate with quarterly fixed budgets. Payments will be made once per quarter and a pay­able rate will depend on the value of the eligible claims received in that quarter with each claim attracting a fair pro rata payment. The benefits of this are that everyone will receive a payment and we will ensure that all available money is used.”

This scenario may be workable for those churches lucky enough to have some reserves or access to a bridging loan, but for many of us it is a nightmare scenario and cer­tainly not a “benefit” or “fair”.

While it may be true that a few churches have tried to disguise what is essentially new work as repairs, there is a genuine discussion to be had about whether priority should be given to those churches that are actually physically at risk and where repairs are urgent and essential, com­pared with those where the building is not physically at risk, and proposed works, however justified in terms of mission, are simply desirable.

Should there be a separate budget only for churches and indeed for other listed buildings on the “At Risk Register”, administered through EH?

Is there not a suspicion that ex­tending liability to VAT is a fund-raising exercise by a Government with neither the money nor the intention to fund the LPW scheme adequately — either for existing claimants or those who will now become eligible?

Whatever the answers, this de­velopment will further undermine the willingness of church members, especially treasurers, and clergy, to become involved in projects that are so hard to get off the ground and demand so much in terms of risk-taking, as well as endless fund-raising. Nor will it ease the burdens of decision-making on members of grant-making trusts, already in­undated with requests.

Inevitably, those who suffer most will be the parishes and communi­ties who most need these buildings, and the general built environment and heritage of the UK.

PAUL PAYTON (Priest-in-Charge)
JAN ALI (Treasurer)
CAROL SMITH (Fund-raiser)
Church of the Epiphany
Leeds LS9 6SW

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