Issue - meetings

This report sets out the Council’s current VAT position and suggests how to mitigate the risk of having to repay to HMRC VAT recovered on expenditure relating to exempt income.

The Committee:

(1)          Noted the implications of the Council’s limited VAT recovery position.

(2)          Agreed to the recommendations 1-3 at paragraph 4.9 of this report to mitigate the risk of having to repay in excess of £176,468 of recovered VAT to HMRC.

(3)          Noted that officers will investigate and report back on further actions that may be required at other buildings to improve the Council’s VAT position and mitigate the risk of future repayments. 

A comprehensive report was presented to Committee that set out the complex issues surrounding the Council’s current VAT position and suggestions as to how the Council might mitigate the risk of having to repay the Her Majesty’s Revenue and Customs (HMRC) VAT recovered on expenditure relating to exempt income.

The Committee was assured that nothing in the report committed the Council to a particular course of action if a solution could be found to the problem.  However, the implementation of some or all of the proposals set out in the report would demonstrate to the HMRC that the Council was committed to achieve the forecast percentages and stay within the 5% recovery over the seven-year period. The timing, location and extent of proposed capital projects and revenue works on properties such as Bourne Hall, the Playhouse and Parks Pavilions would need to be carefully considered, being mindful of the Council’s statutory obligations on the services it provided.

In order to mitigate the risk of having to repay VAT recovered from HMRC in 2016/17 totalling £176,468, plus any Capital Goods Scheme adjustments that might be required, the following action was necessary:

·                     Postponement of the renovation works on the two residential flats in South Street until after March 2019. In the meantime, expert VAT advice would be sought;

·                     Disposal of the Ebbisham Centre by March 2018 without any interim non-essential works;

·                     Review of the private sector leasing scheme & Council temporary owned accommodation to ensure that exempt income was avoided.

Accordingly, The Committee:

(1)          Noted the implications of the Council’s limited VAT recovery position.

(2)          Agreed to the actions summarised above and set out in more detail in paragraph 4.9 of the report to mitigate the risk of having to repay in excess of £176,468 of recovered VAT to HMRC.

(3)          Noted that officers would investigate and report back on further actions that might be required at other buildings to improve the Council’s VAT position and mitigate the risk of future repayments.