Andrew Percy

Andrew Percy

Former Member of Parliament for Brigg & Goole and the Isle of Axholme

Andrew Backs Charity VAT Reform

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Local MP Andrew Percy recently backed a campaign by Sue Ryder to close an unfair VAT loophole which could see healthcare charities lose millions in unnecessary and unfair VAT payments.


Andrew is one of 11 MPs sponsoring the Private Member’s Bill put down by Labour MP Nic Dakin.


The Private Member’s Bill calls for healthcare charities, to whom NHS services are being transferred as part of reform under the Big Society and public service agendas, to receive the same ability to recover VAT on non business supplies as the NHS itself.  As a vital part of the Big Society healthcare agenda, the Private Member’s Bill is Sue Ryder’s next stage in its campaign to create a fair VAT solution.


For 2011/2012 at Sue Ryder’s hospices the charity expects to incur £251,193 in VAT on non business supplies. If this same service was provided by the NHS they would be able to recover 53% of this figure.


The solution is straightforward.  It proposes that the Government looks to amend Section 41 of the 1994 VAT Act so that charities and the NHS can be on a level playing field in relation to VAT recovery.


New figures produced for Sue Ryder suggest that for every £10m spent by the NHS on outsourcing to the third sector, the additional cost burden will be approximately £400,000. This burden will need to be absorbed by the charity.  The figures also reveal that transfers will add 4% to the cost of delivering the services as a result of the different VAT recovery of the NHS and charities.  Estimates suggest that the total spend by PCTs on outsourcing to third party service providers is c. £80bn per annum. A significant portion of this will be delivered by the charity sector and this will increase in the coming years as the Big Society and public service reform agendas increase, leaving the unrecoverable VAT figures potentially in the billions.

 

Andrew Percy MP, said: “Sue Ryder is an excellent example of a charity that has built strong links with communities, local and central government. We need to encourage more charities to build these links and take on delivery of public services where appropriate. The current VAT inequality Sue Ryder has highlighted acts as a barrier to service delivery from the voluntary sector. I hope the government will look at our Bill and ensure they address the issue.”

 

CEO of Sue Ryder, Paul Woodward, comments: "As we embark on our landmark agreement to become a preferred provider of palliative care across an entire PCT - a crucial first step in making Big Society healthcare happen - we need the Government to close this unfair VAT loophole and help put millions of pounds worth of charitable donations back into the services they were intended for. As our proposed solution is entirely cost neutral to the Treasury and has now received cross-party backing, we hope to work quickly with the Government to ditch this tax on care and make effective Big Society healthcare reform a reality”.

 

Sue Ryder provides quality end of life and long term care to people living with challenging and terminal illnesses across the country.  For more information on Sue Ryder visit www.suerydercare.org

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