London Games budget faces big tax bill, report says

LONDON, Nov 6 (Reuters) The London 2012 Olympics face a one-billion-pound (1.90-billion dollars) tax bill after organisers failed to take into account VAT costs for the construction of facilities.

A report in today's Financial Times said bid organisers did not account for VAT in the 2.4-billion-pound Games budget included in London's bid document.

The report said the Olympic Delivery Authority (ODA) and the British government's Department for Culture, Media and Sport had asked for the VAT to be waived by the Treasury.

According to the report the Treasury was unwilling to grant that request because it could breach European Union rules on state aid to construction projects.

Only last week American engineer Jack Lemley, who quit as chairman of the ODA last month, said he had resigned over his fears that the Olympic project would run over budget.

Yesterday, Sebastian Coe, chairman of the London Organising Committee (LOCOG), told the BBC that it was inevitable that costs would increase because of regeneration work around the site of the Olympic Park in east London.

However, news that the initial LOCOG budget for building facilities and running the Games could be inflated by a VAT bill would increase Government fears over the escalating costs of staging the Olympics.

A statement from the Department of Culture, Media and Sport on Monday said: ''Work is still continuing to finalise budgets for 2012 and we are not going to provide a running commentary on how this work is going.'' Reuters PDS GC2025