Charities hit by Vat charges on postal services

CHARITIES and not-for-profit organisations will be among those most likely to be hit by Vat charges on certain postal services from 31 January 2011. Businesses which are unable to recover Vat in full will also be affected.

These changes, which will potentially cost thousands of pounds a year, were introduced as part of yesterday’s Budget.

The changes have been expected since last year when the European Court of Justice ruled in a case brought by TNT Post that the Vat exemption for postal services should not apply to items of post that were subject to competition.

“I would urge any business which fears they may be affected by the change to review their contract with the Royal Mail and seek a claim where appropriate,” said Hannah Dobson, tax director at Smith & Williamson, the accountancy and financial services group.