Officers have made an application for the Charter Trustees to be registered under Section 33 of the VAT Act. If there are no delays to the statutory instrument then the Charter Trustees will be able to reclaim VAT from 4 November 2020, but will not be able to reclaim VAT retrospectively.
The Responsible Financial Officer (RFO) presented a report which updated on the VAT position, a copy of which had been circulated to each Member and a copy of which appears as Appendix 'B' to these Minutes in the Minute Book.
The RFO reported that this report updated Charter Trustees on the process taken by Officers to make an application for the Charter Trustees to be registered under Section 33 of the VAT Act. He explained that if there were no delays to the statutory instrument, then the Charter Trustees would be able to reclaim VAT from 4 November 2020 but would not be able to reclaim VAT retrospectively.
The RFO reported that the HMRC had let officers know from 4 November 2020 onwards that the Charter Trustees can claim VAT but not respectively. He explained the report set out the process for registering and claiming VAT which depended on the legislation used to establish the Charter Trustees. Charter Trustees were advised that there were complexities which had been shown in the dealings with the HMRC in referring issues to their policy team. The RFO reported that the Charter Trustees had been set up alongside BCP Council and the priority was on a safe and legal landing. The RFO reported that the initial assumption had been that the Charter Trustees in the first year would be able to reclaim VAT under the BCP Council banner and the reason was due to the complex precept setting rules that applied to the Charter Trustees in that first year. He explained that BCP Council anticipated the amount the Charter Trustees needed to run its budget, but that amount scored against the BCP Council’s Council Tax requirement and referendum limits so in terms of Council Tax legislation appeared to be part of the Council’s funding. As officers went through the process with HMRC it became apparent that this was not the case and the Charter Trustees needed to be registered under section 33 of the relevant legislation in its own right.
The Mayor indicated that she was disappointed that the Charter Trustees could not reclaim the VAT but now was not appropriate to keep revisiting this issue. Councillor Iyengar asked if this was a one-off and were there lessons to be learnt. The RFO reported that there was an element of both as LGR was a learning curve in itself but Charter Trustees were now registered, and he was not sure if this exact circumstance would occur again.
RESOLVED that the Charter Trustees note the content of the report.