Case studies

The problem

Charities in the UK and Europe continue to be hampered by a taxation system which places them at a disadvantage to non-charitable organisations, weakening their ability to fulfil the charitable purposes for which they were established.

The situation was even worse when CLC began working in this area in 1984.

What we did

For the last 22 years, CLC has been at the heart of the lobbying effort on behalf of charities in this area, focusing both on the UK Government and European Commission. A range of tax reliefs have been introduced as a result, and CLC has also campaigned successfully to protect existing concessions.

The outcome

The concessions that have been secured since 1984 are now worth (conservatively) over £300 million a year to the charity sector, cumulatively totalling over £2.4 billion.

This work is ongoing. CLC continues to be involved in ensuring that the emerging regulatory environment covering the provision of public services by the voluntary and community sector is not hampered by conflicting tax regimes. We also continue to lobby for the Government to address one of the major outstanding fiscal problems affecting charities: the VAT they incur when they spend the money that is generously donated to them. This irrecoverable VAT bill currently amounts to over £500 million a year.

The problem

Free entry to the national museums and galleries was proposed by the Labour Party while in opposition. However, a legislative anomaly meant that museums pursuing a policy of free admission - in line with government policy once Labour came to power in 1997 - had been penalised with a hefty VAT bill (£1 million in an average year for the British Museum alone), while museums adopting a charging policy had been granted 'business' status and enjoyed full VAT recovery.

This problem had forced some of the national museums, such as the V&A, to introduce charges against their will.

What we did

CLC devised the technical solution to enable the Treasury to introduce VAT measures, which involved bringing national museums and galleries within the scope of Section 33 of the 1994 VAT Act. CLC was subsequently heavily involved in lobbying for the introduction of this measure.

The outcome

The Government announced in the 2001 Budget that the national museums and galleries would be able to drop their admission charges without losing their ability to reclaim VAT. Museums and galleries which previously charged have seen a 75% increase in visitor numbers since then.