The Theory of Unintended Consequences - Take Two
I don’t know whether you have noticed that a little change has been introduced about the way VAT is to be charged on stamps/postage. It doesn’t affect the day to day stamps you buy at the Post Office. This refers to bulk mailings. From now on VAT is chargeable on bulk mailing costs. This may have no influence on large commercial companies but charities will suffer a lot. Most charities cannot recover VAT and rely a great deal on dynamic marketing to promote their activities and reach out to their supporter base. It cannot be helpful to their activities if their mailing costs suddenly rise by 20%.
I am sure the Government had no intention of harming charities –the big society idea is very much promoted by the Government. I think it is just one of the things which was overlooked and not thought through. However, with good accounting advice there are ways to mitigate this additional tax charge but as with all things it is getting more complicated rather than easier.