A ruling by the High Court to allow charities to reclaim tax on their fund-raising could see churches and charities across the country claim their share in a windfall totalling millions of pounds.

One VAT specialist said that in future a charity would be able to include fund-raising activities as “a general overhead”.

The ruling was made after the Children’s Society made the case that fund-raising activities should not be made exempt from the rule that allows VAT to be recovered only on the costs on providing a benefit that is paid for.

Corporate-services director for the Society, Charles Nall said on Wednesday that diocesan treasurers should now work together on making the most of the this legal development.

Mr Nall said the ruling by Mr Justice Blackbourne last Friday “has established that fund-raising is not a unique, separate activity,” to which different VAT tax rules apply.

Churches and charities will be able to reclaim some of the VAT on income-generating activities that are VAT-charged, he explained.

The ruling actually extends beyond the wishes of the Children’s Society which had been looking to cover the costs of signing up committed givers and the production of a magazine for them. The VAT ruling will extend partial VAT relief to all fund-raising activities.