£1m bill halts flats for the homeless in Canning Town

Caritas Anchor House in Canning Town faces an uncertain future in light of the �1m bill

Caritas Anchor House in Canning Town faces an uncertain future in light of the �1m bill - Credit: Vickie Flores

A charity has been forced to scrap planned accommodation for homeless people after being hit with a £1million VAT bill.

Her Majesty’s Revenue and Customs (HMRC) reviewed Caritas Anchor House’s description of services, changing its status from “homeless hostel” to a “residential and life skills centre” after the Canning Town charity began construction on its new “move on” flats.

Charity bosses claim they were previously told VAT liability for the development would be £250,000.

Chief executive Keith Furnett accused the government of attempting to sabotage the charity, which provides shelter for more than 230 homeless people a year.

“This is an assault on the charity sector – the government is trying to destroy investment in the charity sector,” he said. “They’ve forced us to find £1m that we haven’t got – nobody can believe what they’ve done to us.”

He called on HMRC to reverse the action, which he says will devastate Caritas Anchor House.

“This case is devastating to our work and to the vulnerable people we support,” he said. “We have worked incredibly hard to deliver a level of service with a reliance on donations and relatively little government funding.

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“We hope HMRC will reverse its decision, and allow us to continue making a huge difference to people’s lives.”

He says the cost may rise from £1m to £1.5m once the costs of halting development and appealing the bill are factored in.

“The amount of resources this is wasting is a disgrace,” he said. “HMRC is smashing up a remarkably effective organisation.

“Iain Duncan Smith says he wants to remove dependency culture in this country – we’re doing it.

“George Osborne says we need to make the country more productive – we’re doing it.”

A spokesman from HMRC said it does not comment on identifiable tax-payers but added help was available.

“VAT status is a matter of law, determined by the nature and activities of the individual organisation,” he said. “Although the tax payable in law has to be paid, we will always provide practical support and advice when approached.

“Time to Pay arrangements are available for those with payment problems.”

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