Claims of almost €40m were made under the Charities VAT Compensation Scheme

Posted on 16 Aug 2019 Last updated on 20 Aug 2019

The Wheel, the national association of charities, today welcomed a statement by Revenue on the outcome of the VAT Compensation Scheme for Charities. According to Revenue’s statement, charities made 1,100 claims, totalling almost €40m, during the first year of the scheme’s operation.

Commenting on the announcement, Tony Ward, Director of Finance at The Wheel said, “Before the introduction of the VAT Compensation Scheme for Charities, which The Wheel and other organisations long campaigned for, charities were unable to recover VAT from their costs - unlike businesses and self-employed individuals.

The fund for the three-year scheme is currently capped at €5m per year. Where the total amount of claims received in any year exceeds the capped amount, charities will be refunded on a pro-rata basis.  

Tony Ward added, “It is noteworthy that, if the €40m is the final figure once Revenue has carried out all checks, each applicant’s payment will be approximately one-eighth of the amount they claimed, which may be a disappointment to those organisations who made modest claims.

“Revenue and the Department of Finance have committed to keeping the scheme under review, and given the large number of claims this year, The Wheel is urging Government to consider increasing the cap to provide a fuller rebate to charities. The high level of claims, at €40m, indicates the extent to which charities are undertaking essential service provision without the right to reclaim VAT on costs. The Wheel is urging the government to review this very welcome initiative,” said Mr Ward.

Revenue expects to make refunds to qualifying claimants on a pro-rata basis during October and November.