To ask the Chancellor of the Exchequer (1) what his estimate is of the annual cost to the voluntary sector of irrecoverable VAT; and if he will make a statement; (110504)

HM Revenue and Customs (HMRC) does not collect data on the voluntary sector’s irrecoverable VAT costs.

The voluntary sector’s irrecoverable VAT costs have been considered by the Government in two major reviews since 1997. In the course of these reviews it was not possible to find a VAT solution that was practical, efficient, affordable, well-targeted and based on principle. Available resources are better and more effectively deployed through the existing tax reliefs and targeted initiatives and support.

HMRC does not hold information about the amount of Gift Aid reclaimed by the voluntary sector; however the amounts donated by individuals and tax reclaimed by charities under Gift Aid for the years 2003-04 to 2005-06 are published on the HMRC website at:

http://www.hmrc.gov.uk/stats/charities/menu.htm

Gift Aid forms part of over £2.7 billion of tax relief for charities and charitable giving that we provide each year, which also includes £200 million in reliefs from VAT. These tax reliefs are in addition to broader Government funding for the voluntary and community sector, which stands at over £3.3 billion per year.