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CIC's and registering for VAT

Does a CIC need to register for VAT if all income is donations and grants?

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Does a CIC need to register for VAT if all income is donations/grants/sponsorship? I.e. do donations/grants/sponsorships count as turnover?

I'm assuming no special rules apply to a CIC and so donations and grants are outside the scope of VAT.

Scenario - there is £100k income in one financial year but it's purely made up donations/grants/sponsorship. For CIC's would this count as turnover so you'd need to register for VAT once you got close to £85k? Or is the £100k not considered turnover so the CIC doesn't have to register at all?

 

Thanks.

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By WhichTyler
18th Nov 2019 22:56

Sponsorship is usually trading, and once you are trading you are have to consider VAT and corporation tax like any other business.

You may be partially exempt, it depends on your activities

So without wanting to sound like a broken record, take professional advice before you start your business, rather than after...

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RLI
By lionofludesch
19th Nov 2019 09:37

You're right that there are no special rules for CICs.

Donations - no supply there so they're outside the scope.

Grants - hmm, well, maybe. You'd have to look at the agreement and see whether they were payment for a service.

Sponsorship - again, is there a service provided here ? Sponsorship is a word that can have different meanings to different folk.

This isn't clear cut.

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Replying to lionofludesch:
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By Daybooks
19th Nov 2019 19:06

Yes it is proving not to be clear cut. I will look much deeper into the grants and sponsorships. Thanks for the advice.

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