Minister unable to help charity over £1m VAT bill

Iain Duncan Smith has commiserated with a Catholic charity facing an unexpected VAT bill for £1 million, but said he is unable to intervene.

The Work and Pensions Secretary was visiting Caritas Anchor House in east London last week to see its work with homeless people in one of the country’s most deprived boroughs, where he was told how HM Revenue and Customs has said development plans would alter its definition as a homeless hostel to a “residential and life skills centre”. This would make it subject to VAT. The charity estimates its total bill could rise to £1.5 million.

Linda Maytum-Wilson, Anchor House’s director of policy and partnerships, said: “It was raised as a problem, but we didn’t focus on it because he’s not really in a position to do much about it. He commiserated and said it was a legal matter, but he hoped for the best.”

The £15.3 million development of Anchor House would create 118 rooms designed as both bedroom and workspace, workshops, a learning zone for e-learning and a kitchen for catering training. There would also be 25 studio flats offering a transition back to independent living.

Cash is being raised through its Home and Hope Appeal which has Ann Widdecombe, Jeremy Paxman, Barbara Windsor and the Archbishop of Westminster among its patrons.

After his visit Mr Duncan Smith said: “Caritas Anchor House is more comprehensive than other homeless charities I have seen. They do more than just offer someone a stable base – they address the reasons why they are there, which is very important.”