In 2018 the Treasury Committee launched an inquiry into VAT, which presented a useful opportunity for CTG to highlight the inequalities in the VAT system for charities – as outlined in our response to the recent OTS VAT review.

CTG’s response to the consultation is hosted on the Treasury Committee website here. It includes representations on Making Tax Digital, Business/Non-Business, VAT registration and obstacles for charities caused by the VAT system.

The scope of the inquiry was:

• Tax Gap: HMRC estimates that it was unable to collect £12.6 billion of VAT in 2015-16. The Committee will examine the root causes of this, how it might be addressed, and the vulnerability of the UK’s tax base.
• Brexit: The UK is currently part of the EU harmonised approach to VAT. The Committee will look at the opportunities and challenges of Brexit for the UK’s VAT regime.
• Business: VAT is notoriously complex and burdensome for businesses to cope with. The Committee will explore what aspects of VAT cause the biggest problems for business, how they might be improved, and how disagreements between businesses and HMRC about how much VAT is due can be resolved quickly and fairly.
• Good Tax Policy: The Committee will scrutinise how VAT measures up against the principles of good tax policy, and how the process of making VAT policy could be improved.