Hi,
I passed my AAT Level 3 in November 2017 and have been approached by my friend who runs a not for profit charity asking how he can reclaim VAT on vehicles and other vat inclusive items purchased for the charity. All the services are provided free of charge and assisted by volunteers. They raise funds by collecting donations and selling merchandise for a small fixed fee. The charity isn't currently VAT registered and I am aware it will need to be in order to claim any VAT back. What I need to know is;
1. Do I need any form of license to do this for him or can he submit the documents from my advice without me having to obtain a licence.
2. Does he have to charge VAT on the merchandise he sells once he is VAT registered?
3. What can he reclaim VAT on
4. The charity has been running for a few years and he has never been VAT registered and therefore has never reclaimed VAT, can he reclaim this VAT back or is it too late?
Any advice would be greatly appreciated. I just need to know where to start.
Thanks in advance to anyone that can help.
Mike
Replies (16)
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Mike - we need to know a lot more about your mate's charity.
Most importantly, how much does it make from selling stuff and how much from donations ? Registering for VAT isn't a ticket to free VAT refunds.
Even if it does have some form of trade, it doesn't necessarily mean that the whole of the VAT will be recoverable.
Do your sums before you register. It may be that you would be out of pocket if you do so (this is true of many small charities).
Mike
You are way out of your depth.
Whilst it is laudable that you are willing to help both a friend and a charity as already suggested above it doesn't follow that registration means all VAT incurred can be reclaimed.
You ask "Any advice would be greatly appreciated. I just need to know where to start." you actually need to know a great deal more than that. The best advice is to stop, before you start.
Here's some background reading for you:-
https://www.gov.uk/government/publications/vat-notice-7011-charities/vat...
Worth keeping in mind that some goods can be zero rated when being sold to a charity. Nots cars. You’d have to register for VAT and carefully do the sums first as already advised above.
Chance of getting the VAT back on the car and bikes is slim to none.
What is the van for ? Is it in connection with the taxable income or the exempt income ?
Why not the motorbike? If VAT is recoverable at all by the charity, I would think the bike is.
Chance of getting the VAT back on the car and bikes is slim to none.
What is the van for ? Is it in connection with the taxable income or the exempt income ?
Sorry - I missed the post where you said what the motor bike is used for. I agree that the VAT is probably recoverable here.
True enough. But from the information so far, I would have thought it is likely to follow the van.
It does sound as if they MAY qualify as a Medical courier Charity in which case they may not need to register to recover VAT.
Blood Bike charities have been able to reclaim the VAT on their non-business payments since April 2015. Have a look at https://www.gov.uk/guidance/claim-a-vat-refund-as-an-organisation-not-re...
You will need to construct a spreadsheet of all the non-business items on which you are reclaiming VAT.
It's pretty straightforward.
Sorry this is late in coming but I have only just seen your question.