A not for profit client has recently registered for VAT. The business supplies training to employers, including Local Authories and public services. Local authorities are stateing that they do not pay VAT.
However, HMRC VATGBP9500 states, 'Supplies to government departments and health bodies are subject to the normal VAT rules and so are generally treated the same as a supply to any other customer'
Any advicde appreciated.
Steven
Replies (3)
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They are liars
Ask them to show you an invoice from the stationers showing no VAT charged.
Still got the email or letter stating that?
Local Authorities do not have any special rules to avoid being charged VAT, they can reclaim input tax under s33 for their non-business activities (stuff they do for free like household bin collections and can reclaim input tax on their business activities (stuff they charge a fee for like parking) like anyone else.
Often with this kind of dispute, language is critical. A not-for-profit charity providing education and training, I'd expect to see their invoices VAT exempt because an eligible body (charity) providing education or vocational training is an exempt supply. Section 4.4 HMRC Notice 701/30
https://www.gov.uk/guidance/vat-on-education-and-vocational-training-not...
I'm not saying the charity is making exempt supplies, as we don't know what training the charity is supplying, but usually charity + education = exempt supply.
So the Local Authority might be saying they aren't expecting to see VAT on these invoices because "they do not pay VAT " (on education/training when its supplied by an eligible body) .... or the local Authority could just be wrong.
First things first, what is it that the client supplies to the LA and secondly, is the charity set up as a limited by guarantee entity with a no distribution of profit clause in their Articles? If no to both, they aren't an eligible body/charity.
What was the driving factor for recently registering for VAT, did they exceed the VAT registration threshold?