A ROMAN Catholic charity for the rehabilitation of homeless people in London has been hit by an “unexpected” £1-million tax demand.
Caritas Anchor House was expecting to pay an element of VAT for the construction of 25 flats — currently under development — to rehouse homeless people in Newham, one of the country’s most deprived boroughs.
HMRC initially categorised the building as a “homeless hostel”, attracting a VAT bill of £250,000. It later changed the description to a “residential and life-skills centre” – a decision that has quadrupled the VAT liability.
Anchor House had raised £1.84 million in the past 15 months to start work on the flats. They are now at risk of being mothballed.
The charity warned in a press release last month that the full cost could rise to £1.5 million once the expense of halting the development, and challenging the decision, are included.
Several of charity’s patrons expressed their concern over the setback at its annual World Homeless Day reception in the House of Lords, last month. The chief executive, Keith Fernett, estimated that scrapping the development, due to a “loophole” in the tax system, could cost society £500 million over the next 50 years.
The chairman, the Rt Revd Mgr John Armitage, Rector of the RC Shrine at Walsingham, remarked at the reception that the charity had “£2.8 million to go — oh sorry, no, £3.8 million to go” to meet its fundraising target of £15 million. “I forgot that extra million the tax man slipped in,” he said.
He said the fact that the charity had been let down was a “massive problem” that he hoped would be addressed with “good sense”. “This has knocked us for six, but it has not knocked us out,” he said.
And he went on to praise an “inspirational” team of staff at Anchor House, sayng, too, that he was “immensely proud” of the residents, some of whom attended the event.
Formerly a seaman’s mission, Anchor House was established in 1962 by the Roman Catholic London Inter-Diocesan Council of the Apostleship of the Sea, but fell into disrepair at the closure of the London Docks in 1969. It was rekindled in 2011 and changed its name three years later.
The existing Anchor House in Canning Town, east London, is supporting 220 people a year, and has an average occupancy rate of 99.2 per cent. The majority of residents are suffering from mental-health issues, substance misuse, domestic violence, or a combination of these. Through volunteering and a Back to Work programme, 28 per cent of residents have secured employment in the past year.
The former Shadow Minister of State for Employment, Stephen Timms MP, also at the House of Lords event, praised the charity’s “capacity to transform despair into hope”.
The charity has 30 patrons including the Archbishop of Westminster, Cardinal Vincent Nichols; the journalist, Jeremy Paxman; and former England international footballer, Sol Campbell.