A friend of mine is part of a nation wide voluntary group that was set up at the height of Covid in March/April to supplier PPE to local NHS and care home works for FREE. The group was set up before Easter as a CIC and incurs considerable amount of expenses in the production of those PPE. VAT was submitted recently and HMRC said since my friend's CIC were only 'donating' those PPE for free, they were not selling or making taxable supplies hence they couldn't claim the input VAT worth 5 figures.
I am in general practice but not a VAT expert in Charity/CIC so any help from anyone will surely help. I just found the whole argument from HMRC quite lame and clearly it looks like someone sitting nicely in their office (home office) were detached from the reality, not knowing what they are talking about and denying legitimate claim of a CIC who fought for the good cause while the country was languishing on as a direct result of the government's own incompetence to supply basic PPE to the NHS and care home. Their organisation relied on individual's donation and within a few weeks managed to spin up a large group of volunteer to plug the very gap in the medical PPE supply chain. Any help will certain be welcome. Many thanks.