Council runs-up £200K VAT bill

AN investigation is underway after it emerged taxpayers could foot a VAT bill of up to £200,000 in connection with a council's involvement in one of Suffolk's biggest retail developments.

Laurence Cawley

AN investigation is underway after it emerged taxpayers could foot a VAT bill of up to £200,000 in connection with a council's involvement in one of Suffolk's biggest retail developments.

The new Arc retail centre will open on the former Cattle Market site, Bury St Edmunds, next spring.

But the Audit Commission has now revealed how St Edmundsbury Borough Council, a partner in the £100million development, now faces a “VAT liability” which could amount to £200,000.


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The commission revealed the matter was currently being looked into and warned it was too early to state what the eventual cost might be.

In his draft report to the council, Robert Davies, an officer of the Audit Commission, said: “The council has been advised that there is a potential VAT liability arising from the arrangements relating to the Cattle Market development.

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“These arrangements are currently being investigated, and therefore the final liability has yet to be determined.

“As a result of this issue, a contingent liability of £200,000 has now been included within the financial statements.”

The report comes just months after it emerged the expected cost of the new public venue, a multi-purpose entertainment centre being built in and amongst the new shops, houses and department store, has soared from just £9.5million in 2003 to more than £16million.

Neither John Griffiths, council leader, or Sara Mildmay-White, chairman of the council's Bury Town Centre and Cattle Market Working Group, was available for comment yesterday.

But David Nettleton, independent councillor and member of the performance and audit scrutiny committee, which will be considering the Audit Commission's report tonight, said he would be asking questions about the possible VAT liability.

“I don't know what this is but I will be asking what it is all about. I will also be asking why the auditor is not interested in the fact that the budget for the public venue has risen from £10million to £12million and up to more than £16million now. I want to know why he is not concerned about that.

“There is unease about the Cattle Market. In terms of finance, it is a mess.”

The exact circumstances surrounding VAT were last night unclear.

However, it is believed the potential liability could be connected to a bid by the council back in 2004 to make sure any VAT incurred on the Cattle Market site was recoverable.

A notice was submitted by the council in 2004 to HM Customs and Excise seeking to make that VAT recoverable and minutes of a council meeting held in May that year reveal how the council had “taken action to minimise the VAT implications on expenditure incurred on the Cattle Market redevelopment”.

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