VAT treatment of charities: The basics

VAT treatment of charities and not-for-profit organisations can be a cloudy area for accountants.

At a recent UK200 Group charities training day, VAT partner at Haslers and director of UK VAT Advice Ltd Debra Dougal clarified...

Continued...

» Register now

The full article is available to registered AccountingWEB members only. To read the rest of this article you’ll need to login or register.

Registration is FREE and allows you to view all content, ask questions, comment and much more.

Comments
memyself-eye's picture

A good summary

memyself-eye | | Permalink

I'm sometimes (Ok often) bemused by exempt/outside the scope/zero rated/standard supply categories for charities..

Education/Training

Michaelr205 | | Permalink

In my experience (from a few years ago the supply of Education/Training was only exempt under particular circumstances i.e. when the Owner(s) provided the education, otherwise the supply would be standard rated. This would imply the supply of such by a charity would be standard rated. Admittedly when we were doing the work a few years ago, charitable status was irrelevant so we didn't specifically look into it.

chrisrei's picture

Charity providing training

chrisrei | | Permalink

Michaelr205 wrote:
In my experience (from a few years ago the supply of Education/Training was only exempt under particular circumstances i.e. when the Owner(s) provided the education, otherwise the supply would be standard rated. This would imply the supply of such by a charity would be standard rated. Admittedly when we were doing the work a few years ago, charitable status was irrelevant so we didn't specifically look into it.

One of the services provided by our registered charity runs a cafe used for training young adults with learning disabilities in the catering industry

We put in a tender for doing the same in another borough and needed to ascertain what the type of VAT supply would be

I assumed that it would be Exempt as it was IMO Welfare

"Welfare services provided by charities are exempt from VAT. Welfare services cover the following supplies:

  • care, treatment or instruction designed to promote physical or mental welfare of elderly, sick, distressed or disabled people"

However, when we checked with HMRC, I was told that it had to be Standard Rated until every trainee had been individually assessed!

Charity providing training    1 thanks

Michaelr205 | | Permalink

In the case we came across the HMRC office had little idea what they were doing, the much larger firm of accountants had no idea and it would seem the VAT consultant brought in to help the accountants had no idea. We had to fight our clients corner and it was difficult mainly because HMRC didn't understand the legislation (I actually think the person working on the case hadn't actually read it, we only made progress when we complained about him and he was taken off the case). I don't know the situation which you talk about, I haven't read the legislation, but from my experience it may well be worth challenging HMRC.

tonyaustin's picture

What is a charity?

tonyaustin | | Permalink

Either the above summary is wrong or the speaker was wrong. SI 2012/735 article 5 applies the definition of charity in Schedule 6 FA 2010 to all enactments relating to VAT. This means the organisation has to meet 4 conditions to be a charity for VAT purposes.

vat treatement of charities

Martin B | | Permalink

flagging

Great work

claudiaterezaa | | Permalink

I am not concerned with there should be tax applied or not applied on your Organization. I have concerned is only that You charity are doing such a great work for Dogs. I really like your organization. keep it up. Please don't demotivate with other's perception. You should complete your vision and mission. assignment writers UK