The Halal Monitoring Committee (HMC) is in the process of being dissolved after it was served with a winding-up petition by HMRC. However, the organisation says it is set to continue its ‘invaluable work’ for the Muslim community. The order has been forced upon the charity after ‘cash flow’ problems and confusion over the payment of Value Added Tax (VAT).
It is believed the winding-up order relates to a six figure VAT bill. In a statement on their website HMRC said “In September 2011, HMC registered for VAT as agreed with the HMRC. Previous to this, HMC believed it was exempt from VAT due to the nature of its work and charity status”. In early 2012, HMRC informed HMC that it should re-bill all its pre-existing customers for VAT dating back from 2005 and make payments due.
The majority of pre-existing customers would be able to re-claim VAT from HMRC but could not pay due to cash flow issues. This requirement by HMRC caused HMC to have significant cash flow problems that could not be reconciled and settled with HMRC.
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