Recommendation 25

The Department had not anticipated that the RFCAs would be liable to pay VAT on work done through the FDIS contract, which has resulted in the RFCAs having had less money available for maintenance than expected. The Department explained that the crux of the issue was ownership of the estate which had been built up over 100 years through donations, departmental funding and purchases by the RFCAs themselves. VAT can be clawed back on assets owned by the Department, and HM Revenue & Customs has proposed that the Department conducts a site-by-site review to establish ownership for tax purposes.38 The Department added that the move to an NDPB may provide an opportunity to review the VAT arrangements as the built estate would sit on the NDPB’s accounts and would then be consolidated into the Department’s accounts.39 Financial oversight