Ty Hafan paid nearly �100,000 in VAT when it built its hospice in the Vale of Glamorgan in south Wales.

The hospice cost �2m to build - but �100,000 went to the Chancellor as VAT.

It is estimated that the tax takes �450m a year from the money charities raise.

Ty Hafan provides care for sick children

Ty Hafan pays VAT on beds, food and essential equipment as well as fundraising items like leaflets to encourage donations.

The Government recently launched a consultation paper on a review of the charity tax system.

The Wales Council for Voluntary action is unimpressed with the proposals, accusing the Government of just tinkering with VAT.