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Grant affecting VATable turnover

Should a grant 'for a specific purpose' be included in when checking whether to register for VAT?

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A CIC received a grant of £48k, from The National Lottery Peoples Project Grant by winning a competition, which specifically included £31k to buy a capital asset. Annual turnover for the CIC are normally 50k-60k, and is £90k for the year in question. 
I believe grants for a specific purpose are outside the scope of VAT, so do we need to go through the procedure of writing to HMRC to apply for a registration ‘exception’?

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By stepurhan
24th Apr 2019 13:39

It's not income for goods/services supplied unless there is something missing from your OP.

That being the case, I'd be inclined to say it is outside the scope and therefore you need do nothing.

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By Les Howard
24th Apr 2019 13:52

Grants are outside the scope of VAT.
But consideration received in relation to a service level agreement, for example, is business income, and may be exempt or taxable.
From your description I think the £31k grant is indeed a grant, but you should consider all activities against HMRC guidance:

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