Charities welcome VAT decision

03 August 2011

Charities have praised Her Majesty’s Revenue and Customs for cancelling a proposed change of tax rules which would see them pay VAT on big building projects.

New interpretation of VAT rules involving design and build projects had caused concern among charities which would have been liable for significant extra costs in many building schemes. (The new interpretation had followed a ruling by the European Court on the VAT payable on caravans and their contents which had been zero-rated.)  

HMRC had proposed a change to the VAT rules for Design and Build contracts, which would mean charities would have to pay VAT on fees for architects and other design professionals even where they formed part of a wider "composite" supply of services in the course of construction of a bespoke building on which VAT would not normally be paid. But after discussions with the Charity Tax Group (CTG) which represents more than 400 organisations, HMRC decided not to make the proposed changes. Their decision was warmly welcomed by the group which praised the “generally positive and constructive relationship between HMRC and CTG on key issues”.  

Melanie Chatfield, General Counsel for The Francis Crick Institute, said: “This is a sensible decision. Charities have to raise millions of pounds to fund projects such as The Francis Crick Institute which will bring enormous benefits to people throughout the UK and beyond.  Changes to VAT rules could stop projects getting underway that are intended to benefit the public by potentially adding hundreds of thousands of pounds to the cost of construction.  But this decision will mean VAT zero-rating on design experts’ fees, when they are integral to construction of a building, will continue for charities.”

The Francis Crick Institute is under construction at St Pancras in London. It will be an interdisciplinary medical research institute. Its work will help understand why disease develops and find new ways to prevent and treat illnesses such as cancer, heart disease and stroke, infections, and neurodegenerative diseases.

The Institute was founded by four of the UK's largest and most successful scientific and academic organisations — the Medical Research Council, Cancer Research UK, the Wellcome Trust and UCL (University College London). The founder organisations will invest a total of around £650 million to establish the Institute and to ensure that it is resourced to make a major impact when it opens in 2015.

 

Notes to editors:

 For more information, please contact The Francis Crick Institute press office on 0800 028 6731 or email press@crick.ac.uk. More images available on request. Follow our tweets @TheCrick. 

The Francis Crick Institute will be a world-leading centre of biomedical research and innovation. It will promote connections between researchers, between disciplines, and between academic institutions, healthcare organisations and businesses.  Dedicated to research excellence, the institute will have the scale, vision and expertise to tackle the most challenging scientific questions underpinning health and disease. 

Due to open in 2015, The Francis Crick Institute is a charity founded by the Medical Research Council, Cancer Research UK, the Wellcome Trust and UCL (University College London). It will be world-class with a strong national role – training scientists and developing ideas for public good. www.crick.ac.uk 

Building on research excellence

The institute will initially build on the complementary skills and research interests of two of the founders' research institutes, the MRC National Institute for Medical Research (NIMR) and the Cancer Research UK London Research Institute (LRI), together with UCL scientists focusing on physics, computing, engineering, imaging and chemistry.

NIMR is renowned for its research in a diverse range of fields, including developmental and stem cell biology, structural biology, neuroscience, immunology and infectious disease. Its 600 scientific staff are based in laboratories in north London at Mill Hill. NIMR's director is Jim Smith.

LRI has an international reputation for basic cancer biology research, focusing on cell regulation and signalling, tumour and tissue biology, and genomic integrity. Directed by Richard Treisman, LRI has some 500 scientists working at laboratories at Lincoln's Inn Fields, central London and Clare Hall, Hertfordshire.

In addition to funding the cost of building the institute, the founders will provide ongoing research support. The Wellcome Trust will fund interdisciplinary research spanning biology, chemistry, physics, maths and engineering.

  • The Francis Crick Institute is a charity founded by the Medical Research Council, Cancer Research UK, the Wellcome Trust and UCL (University College London)
  • The founder organisations will invest a total of around £650 million to establish the Institute and to ensure that it is resourced to make a major impact when it opens in 2015.
  • The Francis Crick Institute is under construction at St Pancras in London.