Co$ in England VAT exempt?

Discussion in 'Scientology Property Tax' started by RolandRB, Jun 21, 2010.

  1. RolandRB Member

    Co$ in England VAT exempt?

    Are they really VAT exempt in the UK. The last sentence in the following article bothers me. Can anyone shed more light on this?

    Church of Scientology tax exempted : WCJB

    But Inland Revenue ruled in 2000 it was conducting its practices as a not-for-profit organisation and thus qualified for VAT exemption.
  2. RolandRB Member

    Re: Co$ in England VAT exempt?

    I am reading this...

    HMRC Scientology tax exemption - WhatDoTheyKnow

    ....and I don't like it. If the Co$ is exempt from VAT and everybody else in the UK has to pay more VAT as a result then I think people have the right to know why, especially in these difficult financial times.
  3. themadhair Member

    Re: Co$ in England VAT exempt?

    That doesn’t follow. Businesses registered for VAT don’t actually pay VAT in the sense you seem to be implying here.

    Imagine you have a company that is VAT registered. Suppose they bought a product for £100 + £17.50 VAT (one of the VAT rates in the UK is 17.5%). The seller pays the £17.50 over to the HMRC while the business reclaims the £17.50 from HMRC. Both the buyer and the business are left unchanged.
    Now suppose the business sells a product for £100 + £17.50 VAT. The business receives £100 and pays the extra £17.50 over to HMRC. This leaves the business unaffected.

    When a business is ‘VAT exempt’ it just means that it can sell products without being obligated to charge their customers VAT. In other words, it isn’t the business that is VAT exempt, but rather the customers of that business. It is the CoS members that save on VAT, not the CoS itself.
  4. Anonymous Member

    Re: Co$ in England VAT exempt?

    This is essentially correct. An accountant is needed here to clarify but if I am correct the only way to off set VAT charges you pay is against VAT charges you make to your customers. That is, unless you collect VAT you cannot not pay VAT on goods or products you purchase.
  5. themadhair Member

    Re: Co$ in England VAT exempt?

    Essentially your products are zero-rated in the exempt case.
  6. Anonymous Member

    Re: Co$ in England VAT exempt?

    Yes, they are VAT exempt EXCEPT for the materials they sell (books, CDs, course packs, emeters, etc.). I remember this because I was in the UK Sea Org at the time when it was being worked on by the Finance Office and OSA UK. They received millions and millions of pounds in a rebate which the Saint Hill people thought they were going to get. However, when the money came in it went straight into DM's coffers even though he did nothing to secure that (ahem) "win." No, I didn't steal the relevant docs before I left so I could later post them on the internet. Sorry. Just consider it witness testimony.
  7. Sponge Member

    Re: Co$ in England VAT exempt?

    I was picking up various snippets here and there when trawling through tons of shit earlier trying (and failing) to find the definitive cite for reasons behind the original 2001 CoS VAT exemption decision (other than press reports citing each other or the cult's own website) and instead found this quite comprehensive article on VAT relating to non-profits....
    One of the main thrusts of that article is that since the VAT exemption only applies to the business operations and not the non-business (charity) side then you can end up paying quite a whack in unrecoverable VAT on certain expenditure despite it relating directly to fund raising. Since the CoS does fuck all by way of actual charity then I suppose it is kind of a moot argument in their case. However, I think there are other VAT concessions such as when funding a certain number of events per year.
  8. RolandRB Member

    Re: Co$ in England VAT exempt?

    Yes I realise that, having run a small company myself that was VAT registered, But at least if COSRECI had to charge VAT then the extra price would put people off wasting their money. And although it hurts their members, at least some money would be flowing into the tax coffers of the country and in a small way reducing the tax burden on others. If people get LESS auditing for their money then the better off they are, in my opinion, as more auditing appears to lead to deeper delusion.

    There is another angle to this that is perhaps more important. The IR lost their court case against the Co$ and this might have been on the grounds that COSRECI proved it was non-profit. This decision then might be in effect for local authorities. In other words local authorities might be forced to recognise them as tax exempt and therefore entitled to a business rates reduction on the strength of this court case establishing the tax-exempt nature of COSRECI.

    There seems to be very little information on this court case. I would really like to read the judgement.
  9. charlie Member

    Re: Co$ in England VAT exempt?

    They got the VAT exemption through the back door, they are a registered charity in Australia there's some kind of agreement between the UK and Australia.
  10. RolandRB Member

    Re: Co$ in England VAT exempt?

    I keep reading that but the documents have never been produced. Nowhere can I find the supposed mutual agreement between Australia and the UK that a charity in one country automatically qualifies as a charity in the other country. Nor do I see any document that shows that COSRECI was ever a charity in Australia. If you have access to any documents that proves either claim then please produce them.
  11. AnotherSock Member

    Re: Co$ in England VAT exempt?

    Just be aware that 'printed material' (books and magazines) is zero-rated for VAT, as are certain other things like clothes for kids.

    If the cult is required to start paying VAT, in the aftermath of the COSRECI scandal that is now breaking, I imagine they'll restructure the prices so that a course of auditing is priced a lot lower, but you're obliged to buy more books. HM Revenue and Customs are not to be toyed with, however, and could deliver us a perfect shitstorm.

    Basically, it's all to play for, depending upon what the 'Today Tonight' reporters have learned about COSRECI, what Senator Xenophon's inquiry does about 'public benefit' tests and how many high-quality harpoons the UK Anons can launch in the meantime.
  12. RolandRB Member

    Re: Co$ in England VAT exempt?

    I think the causal effect of Australia on the UK regarding COSRECI is a lot less than people suppose and might be non-existent. I think the UK people should be doing more at their end and not expect Australia to bail them out. Pressure needs to be put on local authorities who are granting business rates reductions in the UK.

    This is the document I sent to the local authorities in the UK that are granting a business rates reduction.

    MEGAUPLOAD - The leading online storage and file delivery service
  13. Anonymous Member

    Re: Co$ in England VAT exempt?

    Yeah, that kind of conjecture about an arrangement between AU and the UK is pretty old.
    Never has there been anything to even suggest such a thing is true.
    If in fact something was dodgey, it may open the door for a taxation related challenge not unlike what the Victorian Payroll Commissioner launched decades ago

    Maybe something may unfold tonight in the Today Tonight report by Bryan Seymour.
    after all, the headline is all about how the cult operate in AU as a religion and is an AU registered business in the U.K

    Im sure that if their was some sort of agreement, that pesky Xenuphon would be all over it like rice already already.
  14. charlie Member

    Re: Co$ in England VAT exempt?

    View International Cultic Studies Association's e-Library Member Resources

    3/4 down

    The British Value Added Tax (VAT) Tribunal has ruled, following a recent test case involving a car dealership, that the government Revenue and Customs department must pay £4.1 million to Scientology, money the group has overpaid since 1973. Scientology has fought for the last decade to gain charitable status, and therefore certain tax exemptions. The Charities Commission has always refused to recognize Scientology as a religion — it said it saw “no public benefit arising out of the practice of Scientology” — but tax authorities declared in 2000 that the church is a not-for-profit organization that does not have to pay the VAT. . .
  15. TinyDancer Member

    Re: Co$ in England VAT exempt?

    The appeal decision in the VAT matter is here:

    Church of Scientology Religious Education College Inc v Revenue & Customs [2006] UKVAT V19673 (13 September 2006) [FONT=Arial, sans-serif]VAT and Duties Tribunal. According to the judgment, "the amount of VAT claimed was 4.1 million pounds" (the second claim included the entire period of the first claim).[/FONT] In its 2007 unaudited accounts, COSRECI disclosed a receipt of about 8 million pounds from a "compensation claim". Perhaps that's the VAT.

    Of course, having recovered the VAT, it should really have been refunded to customers.

    And prices should have dropped.
  16. Anonymous Member

    Re: Co$ in England VAT exempt?

    Scientology's VAT exemption in the UK is as a direct result of the cult being recognised as having charitable status and tax exemption in Australia. If (When) they lose that status in Australia, they should (will) lose any charitable exemptions in the UK

    Scientology is not recognised as a religion or a charity in the UK.
  17. RolandRB Member

    Re: Co$ in England VAT exempt?

    Thanks for that. Dox are always good.

    Reading the document in that link then it seems HM Revenue and Customs recognised "that the College was an eligible body within the meaning of Note 1(e) of Group 6 to Schedule 9 to the Value Added Tax Act 1994 (a not for profit body applying any profits to future supplies). HMRC also accepted that the services that the College provided were exempt under Item 1 of Group 6 (provision of education, research and vocational training). That ruling is not in dispute. It confirms that the main supplies by the College were and are exempt from value added tax."

    I think it should have been Note 1(f) and not Note 1(e). Perhaps there was a later renumbering. This would then tie in perfectly with this document. Scroll down for Group 6 (education).

    Value Added Tax Act 1994 (c. 23)

    Courses are education but in no sense is "auditing" education. Maybe they should charge VAT on auditing.

    It is true that COSRECI does not distribute its profits. It just makes money to give to the mother Church.

    (i) is precluded from distributing and does not distribute any profit it makes; and
  18. RolandRB Member

    Re: Co$ in England VAT exempt?

    NO, their VAT exemption is to do with HM Customs and Revenue recognising COSRECI as an educational establishment that does not distribute its profits. It is NOTHING to do with Australia and a supposed charitable status. Please read the Acts and the court judgement above.
  19. DeathHamster Member

    Re: Co$ in England VAT exempt?

  20. Anonymous Member

    Re: Co$ in England VAT exempt?

    It seems as though the CoS keeps very good records of contact information for everyone who makes the obligatory, fixed donations for their materials and courses. There are many accounts of people being contacted by the CoS as long as decades later and even after having changed addresses several times.

    Perhaps the CoS can produce some records proving their use of the contact database to locate people and return the taxes that were improperly collected.

    Perhaps it is more likely that one of these will fly out of my ass.

    Hey, is that a Union Jack the little ape is sporting?
  21. Anonymous Member

    Re: Co$ in England VAT exempt?

    this needs davey's face
  22. Anonymous Member

    Re: Co$ in England VAT exempt?

    Here ya go. it's a quick shoop but accurate none the less.

  23. Anonymous Member

    Re: Co$ in England VAT exempt?

    Google google google - much later, what I have found is:
    This document is feedback on proposed corporation [legal defn] tax law rewrite discussion document(s?).
    This strongly implies that the current definition is 'complete'.
    This is the pertinent discussion document

    Income and Corporation Taxes Act 1988 (c. 1)
    Income and Corporation Taxes Act 1988 505,506
    (also other relevant sections, by back references to 506)

    So the tax law does not require that a charity be UK based for tax purposes, only that section two of Charities Act 2006 (c. 50) defining charitable purpose applies
    (Note section one of Charities act is overridden by defn of charity in ICTA)


    My take on what this means: There is no requirement for a charity to be UK based to get charitable tax breaks under ICTA. Clearly, the UK charities commission are highly unlikely to get involved in adjudicating whether an offshore registered charity meets the requirements, where there is a general acceptance of the other countries tax laws (just as, if you pay income tax in one country (say Australia) while on contract to the UK, you are not taxed again in the UK, even though the precise tax laws and rates are different)

    So there is no need for a bilateral agreement specific to charities.

    It seems they weren't - they aren't - but they TOLD the UK Revenue that they WERE. They lied, hence fraud. Worse than what we (well many of us) previously thought - that they were getting a legal tax-break due to charity status in Oz.

    UK Govt needs to either be prepared to get UK Charities Commission to evaluate offshore (alleged) charities claiming tax benefits, OR restrict the definition of 'charity' in CTA 506 to a list of countries with similar, if not identical, public benefit tests.

    And clearly, validate that organisations sending returns stating that they are part of an offshore charity, are telling the truth!
  24. Anonymous Member

    Re: Co$ in England VAT exempt?

    'doh - none of which directly covers VAT or Council Tax... tomorrow I'll go google go again.
  25. RolandRB Member

    Re: Co$ in England VAT exempt?

    What do you need to know? I have done a lot of research on this for my document.

    I don't think the Co$ needs to pay VAT. Even if they did, they would get it off their customers so it would not hurt their pockets. VAT is not charged on books not is it charged on educational courses and this is what they mostly do so they are exempt. As for "auditing" - I don't know.

    Co$ does not have to pay council tax - that is for dwellings. They have to pay business rates instead. And I have written a document about business rates that you can link to below. Perhaps you can proof read it. What else do you need to know?

    Business Rates
  26. Anonymous Member

    Re: Co$ in England VAT exempt?

    I know - I had a quick squizz. Also VAT just because it was in the thread title - I understand the focus on Business Rates.

    Qn: Do business rates also go to the Local Authority?

    I'd be more up for formatting / inserting links etc; but that's not really viable. I would suggest you spend some time on the visual appeal and 'functionality' of the doc, to get more visitors to read the whole thing.

    You might want to pull the definition of 'hereditament' from the other thread, to avoid the confusion I ran into.
  27. RolandRB Member

    Re: Co$ in England VAT exempt?

    Business rates go to central government and then get disbursed from there back to local authorities.

    I'll have a think about what I can do with the formatting.

    I know "hereditament" is confusing for the reader but any billing authority reading it will know what it means.
  28. OTBT Member

    Re: Co$ in England VAT exempt?

    It is still a good idea to add to your document the applicable legal definition. You webbed the document on clambake site, where most people are likely not familiar with the use of this technical term.

    Not everyone who reads the document will be members of the billing authority.

    I proofread some of the earlier versions of the document, but had a totally incorrect definition for "hereditament". A quick Google search gave me a totally wrong definition, which I then proceeded to use.

    / edit, here is the correct definition, for readers

  29. RolandRB Member

    Re: Co$ in England VAT exempt?

    I have put quoted text in tables now and it looks better and is easier on the eyes.

    I added a definition of "hereditament"

    It will be uploaded sometime later today, I guess.
  30. JohnnyRUClear Member

    Re: Co$ in England VAT exempt?

    That's exactly what I thought.

    (Are we bad?)

  31. RolandRB Member

    Re: Co$ in England VAT exempt?

    Just a minor point I overlooked in the first part of your post. The document is webbed on xenu-directory which is Raymond Hill's site and not Clambake.
  32. RolandRB Member

    Re: Co$ in England VAT exempt?

    Some more on this VAT thing but firstly, if you have been following this thread then my document is fixed and is both an html and a PDF version you can link to in my sig.

    Back to VAT, their training should be free of VAT (not auditing, afaik) but only if they are a non-profit body. They managed to persuade HMRC that they were a non-profit body and so it was easy to argue for VAT exemption for at least the training. Where the HMRC went wrong is not investigating whether this claim about being non-profit was a lie. Perhaps they used their bogus unaudited financial statements to prove it and the HMRC foolishly did not insist on seeing independently audit accounts to verify it. Also, the prices being charged for training and auditing should have made it obvious that they were making a profit somewhere so the HMRC cocked it up again.

    I wrote to them yesterday and said they were avoiding VAT by falsely claiming to be non-profit. We'll see how it goes. I imagine it might still be being fought by HMRC otherwise they would have had to pay back shitloads of VAT. I don't just mean 4.2M GBP.

    Another thing, this money that did get paid back was never paid back to the customers who parted with that money. The cult stole it, which is to be expected. Hence me putting my letter in to the HMRC. I spent big money with them and I want that VAT back. And if I can't have it then nobody gets it, especially not the cult.
  33. RolandRB Member

    Re: Co$ in England VAT exempt?

    Sent to:

    Subject: VAT victory against HMRC in 2000‏

    Dear Sirs,

    I understand the Church won a victory in 2000 against HMRC in that HMRC agreed to pay back VAT that had been charged. Of course, this VAT was paid by your paying customers and merely passed on to HMRC so it is these paying customers who should get this VAT back. I am one of your ex-customers affected by this period so I am wondering when the VAT I paid is going to be returned to me as I have received no communication from your Church about this to date.

    Yours faithfully,
    Roland Rashleigh-Berry
  34. AnotherSock Member

    Re: Co$ in England VAT exempt?

    ^ Niiiice.

    What's the UK equivalent to a Class Action called? You should apply for legal aid to instigate one.
  35. RolandRB Member

    Re: Co$ in England VAT exempt?

    I am sure the Church is an honest one (they are a "Church" after all) and I will be getting my money back soon or at least an explanation of the current situation.
  36. nonames Member

    Re: Co$ in England VAT exempt?

    Which period of time does this affect?
  37. RolandRB Member

    Re: Co$ in England VAT exempt?

    This is the UK only and includes any years up to and including the year 2000.
  38. nonames Member

    Re: Co$ in England VAT exempt?

    So anybody who paid for training at cos uk between 1977 and 2000 can ask for reimbursement of the vat?
  39. RolandRB Member

    Re: Co$ in England VAT exempt?

    Yes, that should be the case but the court case may not be resolved yet. Maybe HMRC has appealed. But of course you could ask the good Church to clarify the situation.
  40. themadhair Member

    Re: Co$ in England VAT exempt?

    That depends on whether the CoS issued VAT dockets or otherwise included VAT on their invoices. There are two things they could have done, and it depends on which they did. Did they A) have a £100 price on a course/book/whatever and then charge their customers £117.50 (with the VAT added on) or B) did they only charge £100 and paid the £17.50 the HMRC said was due. The latter means the customers are entitled to squat since the CoS were footing the bill, while the former would be extremely interesting if ex-members could pull up a few VAT invoices.

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