Homelessness charity warns of ‘devastating’ impact of unexpected £1m VAT bill

Caritas Anchor House is warning that an unexpected £1m VAT bill could put its work at risk and place greater pressure on local authorities.

The London-based charity, which provides accommodation to more than 230 homeless people each year, said it faces the charge in relation to its development of ‘move on’ flats to support homeless people.

The unexpected cost would force the charity to mothball the development project, Caritas Anchor House said, place substantial pressure on its services and funds, and increase demand on local authority services.

Caritas Anchor House said the VAT was incurred after HMRC reviewed its description of services and determined its definition as a ‘residential and life skills centre’ rather than a ‘homeless hostel’ left it subject to VAT.

The charity said it had been given advice that the VAT liability for the development would be £250,000, and the higher charge came despite no change in the organisation’s services. The charity said it is being “penalised for positively and accurately describing its work”.

Read the rest of this article at Charity Times.