HM Treasury News Release

178/98                                 29 October 1998
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VAT RELIEF FOR CHARITIES' WELFARE SERVICES TO BE EXTENDED

Charities will soon be able to get VAT relief for a wider range
of welfare services, such as cooking and cleaning, announced
Economic Secretary Patricia Hewitt today.

Speaking at the Charities Aid Foundation conference in London,
Ms Hewitt said:

     "A number of welfare services - including bathing, dressing
     and feeding - are provided on a not-for-profit basis to the
     elderly, sick, distressed or disabled people, and are
     eligible for VAT exemption. A recent VAT Tribunal decision
     extended the definition of welfare services to include
     daily living tasks such as cooking, cleaning and laundry.
     In the light of this, Customs are reviewing existing policy
     with a view to extending exemption to these additional
     services.

     "This is a very welcome and sensible step forward, and we
     will be consulting charities on the exact circumstances in
     which such services will be exempt."

Ms Hewitt stressed the importance of the growing partnership
between the Government and the voluntary sector:

     "The Government values highly the contribution that the
     voluntary sector makes to society, and the Compact between
     Government and this sector, due to be launched in November,
     will further cement the strong relationship we are
     building.

Turning to the Review of Charities' Taxation,  Ms Hewitt assured
delegates that the Review was making good progress:

     "It is important that we give this initiative the time it
     needs. We received over 3000 responses from our request for
     ideas for the review, and we have been carefully evaluating
     them."

The full text of Ms Hewitt's speech is available from the
Treasury Press Office, 0171 270 5238.

# = pounds sterling