AFTER years of fundraising to build a new headquarters, Droitwich Spa Boxing Academy is now facing an unexpected £52,000 VAT bill, which could close it down.

The academy only moved into its £300,000 new home in October of last year, after managing to raise £173,000 from various sources and grants, receiving £100,000 from Wychavon District Council, and fundraising £30,000 by themselves.

At the time the academy, which is a registered charity, had been told it wouldn’t have to pay VAT on the cost of constructing the new building, and that it would be treated much like a village hall or community centre.

However in February of this year, the academy was presented with a tax bill which could cripple the charity.

Club secretary Chris Andrews, said: “When we moved in last October we thought that all our problems were over and we were set for plain sailing, and then this thing drops through the letter box.

“We’ve had it reviewed a couple of times. We could take it to appeal but that would involve a lot of costs for solicitors fees and things, and we’ve been advised that technically HMRC would win an appeal. It’s an interpretation of the rules.”

MP Sir Peter Luff raised the issue at Prime Minister’s Questions this week.

He said: “Droitwich Spa Boxing Academy, run entirely by volunteers, trains talented boxers and provides a highly valued community resource turning around the lives of scores of disruptive and troubled young people. It is a shining example of the Big Society. Does the Prime Minister understand my deep concern that the blinkered decision of HMRC to insist on a draconian interpretation of the VAT rules on its new building will result in the Academy’s closure?”

The Prime Minister replied: “Well first of all I know what an important job the Droitwich Spa Boxing Academy does. It is run entirely by volunteers and I know how hard my right hon. Friend works for his constituents. We will look carefully at this case. As he might know, unfortunately zero rating of VAT on construction services is very limited and doesn’t apply to buildings used as sports clubs.

“HMRC are willing to discuss flexibility on arrangements to pay the VAT bill, through their Time to Pay Scheme, with the owners. What I will make sure is that these discussions take place very rapidly between my hon. Friend and HMRC to see what can be done.”

Afterwards Sir Peter added: “The PM's response fell short of my hopes but does at least give the academy more time to see what can be done to prevent closure. I will now seek to work with the academy, the ABA, Sport England, Wychavon District Council, Worcestershire County Council, Droitwich Spa Town Council and, of course, HMRC to safeguard the future of Droitwich Spa Boxing Academy.”

Mr Andrews is trying to remain positive about the academy’s future.

He said: “I can’t say how things might go forward, but we’re certainly not throwing the towel in. If HMRC took over the building as the only asset we’ve got, they wouldn’t be able to sell it. It’s on land that’s covenanted to Wychavon District Council, and special permission was granted to a boxing club, so they still wouldn’t get their money back. It’s a ludicrous situation.

“Peter Luff has taken the matter up in a very big way and hopefully he will arrange some sort of negotiations. We’re going to stay optimistic.”