EU court sinks investment cost tax reclaim case for UK charities

first_imgUK foundations and charities are likely to lose their ability to reclaim VAT on fund management fees, following a judgement by the Court of Justice of the EU (CJEU).The ruling also means that charities could forfeit VAT reclaims on their fundraising activities.It is expected that this could cost the largest UK charities, including some endowment funds, more than £1m (€1.1m) a year each in extra tax.Until 2005, UK charities had been unable to reclaim VAT on fund management fees or fundraising activities, but a CJEU decision that year held that a German trading company, Kretztechnick, could reclaim VAT on the costs of a rights issue because the funds raised from the sale of the shares were used in furthering the making of taxable supplies by the business.  The Children’s Society, a UK charity, then used Kretztechnick in a successful appeal in the English courts against a decision by HM Revenue and Customs (HMRC) to refuse a VAT reclaim on the cost of fundraising services.Many UK charities have used these decisions to enable the partial recovery of VAT on fundraising costs, and the principle has been extended by some to enable the partial recovery of fund management fees on the basis the investments are used to help further VAT-taxable supplies.However, Cambridge University – whose £3.2bn endowment fund finances university posts and activities – has lost an appeal against HMRC in the EU’s highest court to reclaim VAT on investment management fees. The CJEU said that, unlike with Kretztechnick – whose rights issue was used solely to fund its business activities – the costs of the university’s endowment fund were not an overhead of the business activity of the university because the fund is used for various charitable purposes, and therefore no VAT could be recovered.Legal experts said there was a wider concern that HMRC could use this decision to refuse VAT reclaims on charities’ fundraising costs.Bill Lewis, consultant with law firm Bates Wells, said: “The inability to reclaim VAT on management fees is a blow to the charity sector and especially the bigger endowments.”He continued: “The concern now is that HMRC will say charities cannot recover VAT on fundraising costs, because there are very few that do nothing except carry out VAT taxable business activities.”However, Lewis said that HMRC was unlikely to claw back VAT that had previously been repaid, as it had issued guidance confirming that it would allow VAT reclaims on fundraising costs following The Children’s Society ruling.If the UK leaves the EU Customs Union as a result of Brexit, there is a question as to whether either case will continue to be relevant in the UK. However, Lewis expected EU VAT rules to remain relevant for some years to come.“But if the UK leaves the Customs Union there is an opportunity for the UK to create its own VAT rules without reference to the EU,” he added. “This will require the sector to lobby ministers for as many VAT advantages as possible to be put into UK law.”last_img read more

USG Senate meeting discusses commuter students

first_imgUndergraduate Student Government Commuter Senators shared progress on their proposal to create a lounge for commuter students on campus at the weekly Senate meeting Tuesday night.The proposal, drafted in conjunction with the University Affairs branch of USG, was spearheaded by Commuter Senators Michael Johnson, Hayden Smith, and Brianna Thorpe.“When you come to USC as a commuter, there’s no place to just relax and decompress between classes,” Smith said. “Although the libraries are there, it would be helpful to have a place that could also be used a social space to interact with other commuter students.”According to the commuter senators, students who commute to campus daily often feel overlooked by peers and administration and disconnected from the larger university community. Long gaps between morning classes and evening classes can pose a problem for commuter students who have no place to go on campus between those times. The proposed commuter lounge would serve as a practical gathering place for these students.The commuter senators hope that the lounge will benefit their constituents by increasing connectivity to campus and also providing a place for commuters to meet each other. The Senators plan for the space to have a microwave, refrigerator, lockers, computers and printers, as well as couches and televisions to facilitate a social atmosphere. The lounge would also feature monitors with campus news and traffic updates.“The lockers would be beneficial,” Johnson said in a statement. “Commuter students are at a real disadvantage if they forget any materials at home. Residential or Greek students can run across the street and secure what they forgot, while we must either travel home in L.A. traffic and miss class or continue through our day unprepared.”Smith first proposed the idea of creating a commuter lounge last April as a part of his campaign platform. During the last semester, the commuter senators collected feedback for the project from their constituents through social media and by tabling on campus.According to the commuter senators, other top colleges such as Yale University, Duke University, New York University, Northwestern University, American University and Brandeis University have dedicated on-campus spaces for commuter students.According to the senators, the exact number of commuter students is unknown and largely undisclosed by university officials.“Every number we get is different … It’s sad that there isn’t clear evidence of commuter students’ impact on this campus. I think it is a indication of the lack of inclusivity for commuter students,” Thorpe said.In order to minimize costs, the commuter senators expressed interest in utilizing existing campus resources to create the lounge space — specifically in the Ronald Tutor Campus Center. Smith and Thorpe stated that they had plans to meet with the director of the Tutor Campus Center in order to identify a possible room for the lounge. Until the Commuter Lounge space is designated, the commuter senators plan to create a resource guide that identifies locations on campus where students who commute can rest between classes.Thirty-one percent of those surveyed reported a commute time of more than an hour. According to the commuter senators, the lengthy commute times do not necessarily mean that the student lives far from campus, but instead that traffic is heavy during their commutes. Of the 112 students surveyed, 104 reported commuting during rush hour periods. Nearly all of the students claimed that a commuter lounge would allow them to stay on campus longer during the day.The senators also expressed concern about parking on campus for commuter students.“It’s a problem when you come to campus, and then you go to your designated structure where you pay over $400 a semester to park, and there are no available spaces for you,” Smith said.The limited availability of parking adds time to commutes and often causes commuters to get ticketed for parking improperly in order to get to class on time. Smith expressed interest in utilizing Park Assist technology like what has been used near the Third Street Promenade in Santa Monica to alleviate traffic around campus.As the senators’ terms come to an end in several weeks, the senators expressed hope that their successors will continue to move forward with the commuter lounge project.“It would be extremely useful to get more user feedback … The one thing that people listen to is data because it show that what we are saying is not made up. It’s not just a personal anecdote. It’s a real problem,” Smith said.last_img read more