Questions are being raised over whether YUSU are missing an opportunity to use their charity status to claim back money which belongs to colleges, societies and their members following investigations by Nouse.
As a result of their charity status YUSU is able to claim VAT relief meaning they pay a reduced rate of VAT on a number of different products and services, including venue costs, catering costs and merchandise. As a result of this, when a society or college organises an event, YUSU could be able to claim back a VAT rebate of up to 15 per cent on certain items.
If colleges and societies were included it would mean that every time YUSU pays a bill on behalf of college JCRCs or societies, they can claim back a proportion of the VAT. This is because charities are taxed at a reduced rate of 0 or 5 per cent. This means that a significant amount of money could be reimbursed to colleges and societies if YUSU treated them as linked for financial purposes. As YUSU holds all college JCRC and society money, it is unclear why this is not the case already.
However as YUSU states that colleges and societies are financially separate for tax purposes, despite all money being held by YUSU Finance, no rebate takes place. If YUSU were to claim this then potentially thousands of pounds could be saved collectively on the societies and college grant budget.
For colleges and societies the impact of this potential rebate is highly significant. If a college or society holds an event, then a proportion of their costs could be reimbursed by the VAT rebate. For example, in the case of Vanbrugh College’s Winter Ball, which cost nearly £9000 to host, up to 15 per cent (£1350) of that cost could have been returned in the form of a rebate.
YUSU President Ben Leatham said that: “Clubs, colleges and societies each have their own governing documentation and or constitutional independence and can spend their finances how they wish within that framework and therefore are financially separate from YUSU. YUSU is partially exempt for VAT and only certain elements/activities fall under this category. Expert VAT advice has been taken to ensure the most tax efficient structure is in place to benefit members and YUSU with the VAT treatment for clubs, colleges and societies being regularly reviewed.”
An independent expert, approached by Nouse, was consulted as to whether it is feasible that colleges and societies could be linked to this VAT relief system. The expert stated that as YUSU controls the finance of the societies and colleges, despite being independent for tax purposes at the moment, he could see no reason why this could not happen in the future.
Based on this information, the question has to be raised why colleges and societies are treated as financially separate for tax, when the administration of finance is handled by YUSU.
As YUSU’s charity status means it does have the privilege of VAT relief, it could mean that thousands of pounds of unclaimed VAT money goes to the tax office every year instead of being repaid to colleges and societies.
Following Nouse’s findings, a number of college JCRC sources have expressed their concern with this news, with one claiming that if this was possible then, “the potential rebate money would actually fully pay our subsidy for certain events”. Another JCRC source pointed to the fact that “nobody in the colleges knows what happens to the VAT rebate money”.
It is not only college JCRC sources who are concerned about this news. Students and society heads have also expressed their concerns about this situation, with one telling Nouse that “If this is the case then I want to know why we as fee payers don’t receive a reduced cost; YUSU are supposed to be on our side.”
This is the latest concern to emerge regarding YUSU Finance and follows the news that this paper broke in a previous edition that YUSU often fails to pay societies on time, often nearly costing societies whole events.
One college source pointed out how YUSU failed to pay a YUSU approved company (one on a list which colleges are limited to hire from) on time, and so the company has refused to work with the college again in the future. This left the college with even fewer options for ‘YUSU approved’ services should they decide to run a similar event again.