Exempt Vat

Exempt Vat

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We run a few events and receive income via sponshorship, fees, Grants etc and for the first time we have an event coming up that has only a Grant as income, no fees or sponshorship etc.

My question is this:

Am I right in thinking that as a Grant is Vat exempt, that we cannot reclaim any input Vat directly linked to this event?

What Vat code should be entered when inputting these purchase invoices, should it be exempt?

Many thanks.

Rob

Replies (3)

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By theaardvark
30th May 2007 09:57

Charity?
It sound like you are a charity or similar organising fund-raising events. If so, I would recommend you speak to a VAT specialist as there are specific rules governing the liability of fund raising activities that could mean the majority of your income is exempt.

However, a genuine grant is not exempt (regardless of your charitable or otherwise status). A grant, freely given without expectation of anything in return, is outside the scope of VAT. The deductibility of the input VAT linked to the event will depend, therefore, on the purpose of the event itself.

If it is raising money to support a taxable activity then it the input VAT will be deductible. if it is raising money to support a non-business activity it will not be deductible.

Hope that helps.

Regards,

Paul Taylor
Senior VAT Consultant
Dains

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By Richard Willis
30th May 2007 08:56

What do you run the 'events' for?
Hi Rob

You say that you run 'events' but do not say for what purpose. If your company is running these events in order to promote its main trading activity, and assuming that this activity is wholly taxable, then I can see no reason why you should not reclaim any VAT. It would be reasonable to assume that any grant was based on estimated NET cost anyway and would not be deemed as income but defrayment of the costs.

I cannot see that you are an events organising company as then your client, not you, would surely get the grant. You may need to clarify.

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By robbie1971
31st May 2007 13:15

Answers to previous questions.......
Hi there, thank you both for your comments.

Just to clarify, the company is a charity and promotes awareness of housing and planning regulations and to encourage the public to take a more active role within the constraints in relation to this.

We run a few events to help promote awareness in particular key areas, to help encourage discussion within the public at large.

Richard, you are correct in assuming that we are not an events organising company, as we organise and run these ourselves.
Perhpas conference would have been a better term.

We have particular on-going projects which provide the main stay of the work.

Rob

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