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VAT blow adds to financial pressure

Customs and Excise has clamped down on charitable benefits of universities, further education colleges, grant-maintained and independent schools.

Officials ruled that from June 1 charitable organisations must pay 17. 5 per cent VAT on recruitment advertisements for paid staff. They were previously zero-rated.

Accountants Coopers and Lybrand warned education establishments could be among the hardest hit. It said that because of charities' exempt status, many would be unable to reclaim the VAT.

Universities spend Pounds 5 million annually on national newspaper advertising - most on job advertisements. Ted Nield of the Committee for Vice-Chancellors and Principals said the decision came on top of the squeeze on university finance. He warned: "Universities are going to have to find this extra money for advertising from somewhere else."

Cecil Knight, chairman of the Grant-Maintained Schools Standing Committee, said: "This is yet another financial burden to bear which will fuel a certain degree of resentment." But he admitted: "I can't really think of any good reason why we should have charitable relief on job advertisements."

Advertisements for volunteers, continue to qualify for the relief, as do advertisements for university courses, school open days and fund-raising events.

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