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Output VAT on lottery grants

Output VAT on lottery grants

Bit of a mental block here: I'm aware that a local authority grants may or may not be a business activity and therefore may or may not be VATable in the hands of the recipient. I'm also aware of the Wolverhampton CAB case on this, and VAT notice 701/1. If the grant is considered to be a business activity, the recipient organisation can register for VAT, bill the local authority on a VAT invoice and recover input VAT.

However, if the grant comes from the Lottery (a) can it ever be a business purpose, and if it can (b) is VAT charged on an "invoice" to the Lottery when claiming the grant?

Thanks for the help -

Alan Burton


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20th Mar 2009 15:40

Non-business income
The tests to be applied to answer whether income is to be treated as business or non-business are applied to the recipient, not to the provider. The source of the money is not an issue, although it may provide an indication. If it were business income, then the 'grant' woudl have to be calculated VAT-inclusive.
The recipient of the grant has to take advice to determine whether their activities are business or non-business. Tests from the Lord Fisher and Morrison's Boarding House Academy Association should be applied.

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