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Treasury admits out of date data used in Church VAT estimates: The Church of England Newspaper, May 20, 2012 p 4. May 28, 2012

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David Gauke MP

The government’s estimates as to the costs of the changes in VAT to the Church of England were based upon 12 year old date, Government ministers told Parliament last week.

The revelation that the government had used outdated information in calculating the impact of its proposals came in response to a question from the Second Church Estates Commissioner, Mr. Tony Baldry.

He asked the Chancellor “what estimate he has made of the revenue which will accrue to the Exchequer as a consequence of the removal of the zero VAT rate for alterations to listed buildings” and “what assessment he has made of the effect on listed places of worship of the removal of the zero VAT rate for alterations to listed buildings.”

Mr David Gauke, the Exchequer Secretary to the Treasury, responded on 30 April 2012 that a government report had set “out estimates for VAT which will be raised from approved alterations to listed buildings and a summary of impacts upon which comments are invited.”

According to the document, “Listed places of worship will also be affected by the change, although our evidence suggests that places of worship form only a small minority of the total number of listed properties in the UK.”

To “mitigate the impacts on these groups the DCMS is expanding the existing Listed Places of Worship Grant Scheme which refunds the VAT on repairs and maintenance work, so that this includes approved alterations to listed buildings,” the Treasury report said.

However, no details as to the revenue which would accrue from taxing church renovations was provided in the report, though details on the tax on hair dressers’ chairs, self-storage units, and holiday caravan parks was provided.

Mr. Gauke added that “our original estimate, based on a church report produced in 2000, was that £5 million a year additional funding for the Listed Places of Worship Grant Scheme would be adequate compensation for listed places of worship for the impact of the VAT change. We are talking to churches and will increase this amount if there is evidence that the impact is greater.”

First printed in The Church of England Newspaper.

Church VAT meeting with George Osborne: The Church of England Newspaper, May 6, 2012 p 6. May 11, 2012

Posted by geoconger in Church of England, Church of England Newspaper, Development/Economics/Govt Finances, Politics.
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The Second Church Estates Commissioner and the Bishop of London have asked the Chancellor of the Exchequer, Mr. George Osborne, for a “full exemption” for churches on the government’s plans to impose VAT on church alterations.

Speaking to the House of Commons on 26 April 2012, Mr. Tony Baldry said the meeting with the chancellor had been “helpful and constructive.”

The chancellor had given a “commitment to ensuring that listed places of worship would not be adversely affected by the Budget proposal, and I am sure that he will do everything he can to deliver on that commitment,” Mr. Baldry said.

The Church Commissioners were “pushing for full exemption. The listed places of worship scheme is welcome, but it is very volatile and uncertain at the moment because people are never quite clear how much they will receive back under the scheme, he said.

Mr. Baldry and Bishop Richard Chartres “made it clear why we believed it to be in the best interests of the community to continue to exempt alterations to listed places of worship from VAT. We gave the Chancellor a full written submission” and he “undertook to consider our submission carefully and made clear the Government’s commitment to ensuring that listed places of worship are not adversely affected by the Budget proposal. I anticipate a further meeting with the Chancellor and the Exchequer Secretary in due course,” the Second Church Estates Commissioner said.

The member for Bermondsey and Old Southwark, Simon Hughes (LD) asked if Mr. Baldry would “apply pressure” on the Government so that it understands “that simply extending the scheme’s remit to give money, when the budget has been cut, does not solve the problem, unless the rules are changed.”

Mr. Baldry concurred, saying “we are keen that the Chancellor maintains the VAT exemption for church alterations is the certainty it brings. However much money is put into the listed places of worship scheme, it has its own inherent volatility and uncertainty, and no one is sure until after the event how much the refund will be. In the last quarter, for example, only just over half of the money for the listed places of worship scheme was refunded.”

The member for Congleton, Fiona Bruce (Con.) questioned the feasibility of the government’s plans. “The Treasury has said that there will be an exemption from the new rules for contracts that have already been signed, but many churches have already undertaken ongoing works. Could there be some flexibility in that respect? Secondly, if the grant scheme is to be reviewed, could it be so over a period of several years, not just one or two years, so that there can be certainty? Works often take many years.”

Mr. Baldry stated that he agreed that it was “important to get the transitional relief right. We made it clear” to Mr. Osborne “that if he was not minded to follow us on continuing the exemption, but wanted to increase the grant under the listed places of worship scheme, we would want to see certainty over the sum, not just for this year but for a whole number of years to come.”

First printed in The Church of England Newspaper.

Treasury to reimburse Church on new VAT: The Church of England Newspaper, May 4, 2012 May 11, 2012

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The Chancellor of the Exchequer has promised to reimburse listed churches for the costs of VAT for church improvements.

Speaking in the House of Lords on 24 April 2012, Treasury minister Lord Sassoon confirmed that an agreement had been reached the previous day by the Bishop of London, the Second Church Estates Commissioner and the Chancellor, Mr. George Osborne.

“The Government are fully compensating churches for the changes in VAT,” Lord Sassoon told the Lords.  Asked how the Treasury would mitigate the £20 million in additional cost to churches in its budget proposals, Lord Sassoon said the Chancellor “made it clear” in his meeting with Bishop Richard Chartres and Tony Baldy MP “that the £5 million which the Government have committed to the listed places of worship grant scheme in the Budget is on top of the £12 million which the scheme already had.”

“We accept, having seen the churches’ numbers, that the VAT change will indeed be more than £5 million and that we need to commit more money, and discussions will continue next week to look at what the projected numbers and our commitment should be,” the minister said.

Lord Sassoon further stated that projects already underway would not be subject to the tax.

“Contracts in place on [Budget day] will retain the zero rate if the work is performed by 20 March 2013.”

In last month’s Budget, Mr Osborne announced a 20 per cent tax on alteration work on listed buildings.  The Treasury said the new tax would be imposed to remove a “glaring anomaly”, where alterations to listed building were exempt from VAT, but repair and maintenance work was not.  It was also couched in terms of fairness, with Coalition spokesmen saying it would prevent the owners of listed mansions avoiding paying VAT if they added a swimming pool.

However, the plan would also tax churches. The Bishop of Bath & Wells asked Lord Sassoon whether the government had thought through the implications of its decision, suggesting that it was at odds with its Big Society agenda.  “Of the 563 churches in my diocese, 503 are listed-some 89 per cent. Their upkeep relies almost entirely on voluntary fundraising and support from their congregations. In promoting the big society, many wish to open those buildings to wider community use. What incentive does the minister believe is being created for congregations to do so by making them pay VAT up front only to claim it back through a scheme that is not adequately funded,” the bishop asked.

Lord Sassoon responded the government did not “want to see anything that incentivises people against repairing and maintaining and therefore preserving the core heritage features of the property, so we think that it is right to put alterations, repairs and maintenance on an even basis.”

However, a spokesman for the Archbishops’ Council told ThirdSector the reimbursement scheme was not ideal. “As a sort of concession it seems the Chancellor has said expenditure on alterations, as well as repairs, will now be eligible for this scheme, and it will have some extra money,” he said.

“But it’s pretty easy for the government to get rid of public expenditure. This scheme has already got less generous since it was introduced. It’s already being used pretty much at capacity,” the spokesman said.

First printed in The Church of England Newspaper.

CoE facing £20 million VAT bill: The Church of England Newspaper, April 29, 2012, p 6. May 6, 2012

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Tony Baldry MP

The Government’s plan to end the VAT exemption for listed building alterations will cost the Church of England an additional £20 million per year, the Second Church Estates Commissioner told Parliament last week.

On 18 April 2012 Mr. Tony Baldry responded to a written question from the member for The Wrekin, Mr. Mark Pritchard (Cons.) asking whether the Church Commissioners would speak to the Chancellor about the financial effects “of VAT changes to repairs for listed church buildings in the diocese of Hereford and Lichfield.”

Mr. Baldry stated that he wrote to the Chancellor of the Exchequer on 22 March and intended to “follow this up with discussions soon.”

Ending the VAT exemption was likely to cost the Church of England £20 million per year as it had “responsibility for the care and upkeep of 12,500 listed churches and cathedrals across England.”

There repairs were “largely met by the voluntary giving and activity of its congregations,” he said, noting the “large majority of alterations” took place “order to improve access to them and to broaden their use by the wider community.”

The cost to Hereford under the proposed VAT changes would cost the cathedral “an extra estimated £160,000 to complete its existing plans to improve its sound, lighting and heating systems.”

Mr. Baldry said that of the Hereford’s 423 buildings, 360 were listed churches. He cited the case of St John the Evangelist in Shobdon, which was “currently completing a £900,000 restoration project of which only 10% has been completed. The application of VAT to the total cost is likely to prove a significant setback.”

In the Diocese of Lichfield the proposed changes would add a further £240,000 to its costs of adding “toilets and facilities for the disabled” and renovations to the Close.  Of Lichfield’s 450 buildings, 315 were churches who would be affected by the changes.  “No specific figures are available for projects in 2012, but across the diocese a conservative estimate of over £300,000 was spent on alterations to parish churches in 2011,” he said.

The Second Church Estates Commission noted that “though proposals in the Budget impact mostly on alterations to listed church buildings—as distinct from repairs—in that they remove the zero VAT rating for all listed building alteration works, the Church of England is concerned that the money available to reimburse churches for VAT charged for repair work will also be affected as a consequence of the extra demands placed on the Listed Places of Worship Grant scheme, which is to have eligibility widened to include alterations.”

First printed in The Church of England Newspaper.