VAT for UK Charities

VAT can be a minefield for charities - the varied nature of charitable income, carrying on a ‘business activity’ even if not considered to be trading, and the numerous VAT reliefs not available to commercial companies, all mean that keeping up-to-date with legislation and being able to cut-through the complex regulation is vital.

Organisations also change over time - adapting to changing needs of beneficiaries, adopting new ways of carrying out activities, and new methods of generating income.  To ensure that your position is up to date, we recommend that full VAT reviews are carried out regularly, at least every couple of years, and more frequently when income streams change or if you carry out capital expenditure.

We can assist by undertaking a full VAT review to ensure that:

  • VAT is being properly applied on your various income streams, including all of your commercial activities,
  • VAT is being correctly reclaimed on your expenditure,
  • Your partial exemption calculations are still appropriate and most beneficial for the charity.

We can also help on an ad hoc basis by advising on specific matters including:

  • Assessing whether income is from a grant or under contract and determining the VAT implications,
  • Reviewing the impact of charity trading,
  • Considering the group structure and whether a trading subsidiary is needed, and if so ensuring that VAT is fully considered in respect of recharges between the charity and the trading company,
  • Providing pro-active advice on property matters.