Pamela Greener: Budget burden puts tax on the battle to maintain our heritage

Most taxpayers applaud the instant closure of tax loopholes as we are, of course, “all in this together” but the nation should be entitled to demand fair play when it comes to moving the goalposts on the tax pitch.

One shock announcement in the Budget that has, in practice, immediate effect is the levying of VAT on alterations to listed buildings.

What this means is that any community group getting together to raise funds to bring back into life some crumbling listed building in their locality will now have to raise an additional 20 per cent on the cost of the work.

So community groups and charities who work tirelessly to preserve our nation’s heritage for future generations are now landed, by this Big Society government, with a 20 per cent VAT bill on the full project costs.

This would have applied to major projects such as the recent restoration of The Royal Hall in Harrogate and the Gibson cotton mill visitor attraction.

It also, at a stroke, jeopardises the nave restoration project at Wakefield Cathedral which began in March 2012 but which is now faced with raising an additional £200,000 to cover VAT imposed by the Budget.

Will all those willing to host a coffee morning in aid of the Cathedral’s VAT bill please form an orderly queue in the Cathedral precinct? Or better still, sign our online e-petition at No 10: “Save Our Heritage, say No to VAT on work on listed buildings”.

HMRC tell us that the justification for this move is “to remove a VAT anomaly” whereby VAT is levied on repairs to listed buildings but not on alterations.

HMRC claims this incentivises “alteration” to prevail over “repair”. But just keep in mind that these are listed buildings.

In the vast majority of cases they use expensive materials and bespoke craftsmen not necessarily from choice but to comply with the Listed Buildings rules.

Projects take years to get off the ground because each building has special requirements.

Why repairs to such places should carry VAT at all is beyond me, but for VAT to be applied to alterations as well (which previously were zero rated) would appear to be entirely the wrong solution to any anomaly.

Restoration and maintenance of listed buildings should not be subject to VAT because there is no justification for government to collect 20 per cent of hard raised funds. Businesses benefit from the lowering of the rate of corporat ion tax in the tax merry-go-round but charities receive nothing at all in return for this additional tax.

Except, that is, another shock Budget announcement that will knock a huge hole in funding for charities, namely the proposal to cap individual gifts to charity in any tax year.

At a time when the public sector services are being severely curtailed, it is the charitable sector, as well as the private sector, that is expected to take up the slack. Paid for with what, one might ask, if this proposal goes through?

So, Mr Osborne, let’s bring on the speed camera test.

One would think that instant (or effectively retrospective) tax announcements, accompanied by an immediate “Consultation” process that lasts all of six weeks and just happens to straddle both the Parliamentary recess and Easter holidays, would breach the Taxpayers’ Charter.

But while the Taxpayers’ Charter might set out how HMRC and taxpayers interact and what can be expected from whom, one seat at the Charter’s table is yawningly vacant. Namely that of the Government. What is the point of a Taxpayers’ Charter that only kicks in once the tax is enshrined in law? Surely the Charter should extend to the process under which tax change is proposed to become law?

So we look to HM Treasury’s website for guidance on consultation. “Effective consultation” we are told “is a key part of the policy making process. Responses to consultations help shape policy developments and set the agenda for better public services”. Really? Key word here is “effective”.

So how can consultation be “effective” when timelines are so short and changes immediate? How can charities, religious and community bodies suddenly drop all that they do and focus on the complexities of a tax system which now seems to have shifted materially in the wrong direction for a Big Society and respond in just six weeks?

I applaud the Big Society approach. I think it means that “we’re all in this together” and if so we are entitled to expect that the standard of governmental behaviour will be high and will encourage the building up of communities throughout the country.

This includes the preservation of our heritage for future generations. But Mr Osborne, please note that Big Society does not extend to saying to the widow: “You owe me 20 per cent VAT on your mite so pay up now.”