Tax bill hits children's hospice

It is hoped the new unit will be up and running by 2010

A charity that cares for terminally ill children has been hit with a £350,000 tax bill after it managed to raise £2m for a new development.

Staff and patients at Derian House in Chorley, Lancashire, are hoping that HM Revenue and Customs will retract its demands.

Building work has already started on the four-bedroom house, which will accommodate young adults.

Chair of the trustees, Margaret Vinton called the tax bill "shameful".

The huge tax bill comes from the VAT on the building materials, a tax that the charity did not expect.

Mrs Vinton said: "We rely solely on donations, from people who have already been taxed themselves.

"To tax us again feels like we are getting a double tax.

The charity gives round-the-clock care

"It costs us at least £1.7m a year to run the house, every child that comes to us stays with us free of cost.

"We are here to provide help, relief and support to families going through a very traumatic time."

The four-bed development will be in addition to nine-bedroom accommodation for infants through to 16-year-olds, which was built in 1993.

The new building will accommodate young people between 16 and 23 years, giving them somewhere comfortable with round-the-clock care for their last months and weeks.

Ms Vinton added: "We have been promised some more money from other donors.

"We have to find the money regardless because building work has started."

It is hoped the project will be finished by the end of 2010.