It affect business! It affects charities and how much of their money goes on important services, and how much gets lost to VAT . It affects the ability for small enterprises to tender for work in the third sector .
Many charities apply for public funding for projects. They then put out tenders or calls for people to deliver services. This can be anything from building works to arts organisations delivering projects. VAT registered companies who apply are often asked to tender for costs inclusive of VAT because the charity is not vat-registered themselves, and cannot reclaim the vat and won't have the money in their budgets as a "just incase of VAt".Some funders dont like contingency. This means some suppliers are deemed expensive, not because of cost, but because of financial regulation. We propose that if a charity contracts a vat-registered company, the charity can re-claim the vat back. OR, the company can supply VAt 0% invoices to charities, who, by definition, are not providing luxury but necesary services. When VAT goes up to 20% this will have a huge impact on charities who's applications for funding will not have taken this into account and may have an affect on exisiting services. As a supplier currently delivering for a trust, I know they cannot afford an extra 2.5% VAT hike to pay for us in the new year. Are we expected to aborb that by offering a reduced serivce, or lose out ot a non-wat regsitered organisation?