The VAT Compensation Scheme came into being on 1st January 2018 and started it’s life as a three-year pilot programme taking us up to 31 December 2020. With that period now passed the scheme is currently under review and we await a decision on whether or not it will be continued, expected in Budget 2022 on 12th October 2021.
As you might be aware, the scheme allows charities to claim a refund of a proportion of their eligible VAT costs, based on their level of non-public funding.
When the scheme was originally announced it’s fair to say that there was a level of uncertainty across the board. Many were unsure about how exactly the scheme would work, whether the €5m announced was enough, how accessible the scheme would be and whether or not we would see a significant uptake in the scheme from charities.
Three years on when looking at the numbers of those availing of the scheme, the results speak for themselves. Over the course of the pilot period the scheme has been significantly oversubscribed in every one of the years. At the end of this period, it is clear that the €5m cap is proving insufficient in meeting the demand.
Across the three years the claims vastly exceeded the €5m available. In 2018, claims made were valued at just over €37m; for 2019 claims amounted to over €39.5m and for 2020 claims were made for almost €32m.