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When are grants not exempt from VAT?

How to know when to include grants in VATable turnover calculations

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I thought that all grants were outside the scope of VAT meaning I have not been including them when calculating our VATable turnover (total turnover passed £85k months ago). Now I have found this website (https://www.gov.uk/hmrc-internal-manuals/vat-business-non-business/vbnb4...) and don't understand how to figure out which grants should have been included in my calculations in order to establish when they should have/ need to register for VAT.

The charity provides a service to children and families using the grants to fund salaries and equipment needed. 

Replies (6)

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RLI
By lionofludesch
06th Nov 2020 16:20

The question to ask is "was any supply of goods or services given in return for the grant money?"

If no, it's outside the scope of VAT.

If yes, more than likely, it isn't. Whether there is any VAT to be charged then depends on what you're supplying.

Thanks (2)
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By CHRISTINA GORHAM
06th Nov 2020 16:40

Hi Lionofludesch

Thank you for replying. In this case the answerer is no. (que massive relief at not having given the wrong advice)

I wish the attached article used plain English instead of legalese. It's confusing for this bookkeeper. Perhaps it's just because it Friday?

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Replying to CHRISTINA GORHAM:
RLI
By lionofludesch
06th Nov 2020 16:54

CHRISTINA GORHAM wrote:

I wish the attached article used plain English instead of legalese. It's confusing for this bookkeeper. Perhaps it's just because it Friday?

You're looking at HMRC's internal manual.

It's aimed at their officers, not the odd inquisitive layperson.

Thanks (1)
chips_at_mattersey
By Les Howard
06th Nov 2020 18:29

This link to pages VATSC06317 AND VATSC06318 is helpful: https://www.gov.uk/hmrc-internal-manuals/vat-supply-and-consideration/va...
Both pages have checklists. They represent HMRC's current position, although not very easy to follow.
As above, this is primarily guidance for HMRC Officers, which has now been made available to the general public.
You could ask an Accountant or VAT Specialist to undertake a review for you.

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Replying to leshoward:
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By CHRISTINA GORHAM
06th Nov 2020 19:09

Thanks Les

As ever, valuable advice.

These pages have confirmed the grants I referred to are outside the scope of VAT. The charity is safe from a nasty surprise.

Thanks (1)
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By frankfx
06th Nov 2020 21:48

https://www.gov.uk/government/publications/trustees-trading-and-tax-how-...

A super abundance here on charity and trustees .
Many trustees will not bother acquiring awareness of the depth and breadth of responsibilities.

Tax on activities may be overlooked.

Trustees may simply assume that others involved in dealing with charity affairs will be fully knowledgeable and poised to advise.

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