VAT
Value Added Tax (VAT), as contrasted with direct tax considerations, looks at whether an activity is ‘business’ or ‘economic activity’. ‘Business’ has a different definition from ‘trading’ for direct tax, and an activity could still be considered ‘business’ for VAT purposes but not be a ‘trading activity’ for direct tax purposes.
The main reason why there are so many differences between VAT and direct tax is that VAT has its roots as a European tax and for many years the UK had to comply with European Union law in respect of it. Following the UK’s exit from the EU this may be reviewed but it is likely that there will be alignment in many cases and existing laws will continue to apply until changed.
When VAT was enshrined in UK law, certain derogations were allowed by Brussels, the most important of which for charities is the zero rate. Without this derogation, the minimum VAT rate that would apply would be 5 per cent. The standard rate of VAT in the UK is currently 20 per cent.
HMRC VAT Notice 701/1 explains how VAT affects charities, how a charity’s income is treated for VAT purposes and what VAT reliefs a charity can obtain on its purchases.
CTG maintains a comprehensive list of recent and ongoing VAT cases relevant to charities.
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Latest on VAT
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- Tax updates
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Approved Mileage Allowance Payments – update from HMRC
1 July 2022
- News
- VAT
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CTG Expert Insight Session – the relationship between charities and their tax advisers
16 June 2022
- News
- VAT
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Commentary on Revenue & Customs Brief 10 (2022)
- Graham Elliott
13 June 2022
- Commentary
- VAT
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Business Rates Revaluation 2023: Consultation on the transitional arrangements
6 June 2022
- News
- VAT
- Older posts
Tax updates
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HMRC updates guidance on the VAT Tour Operators Margin Scheme (TOMS)
9 September 2019
- VAT
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VAT zero rating of transport of disabled passengers
18 June 2019
- VAT zero rates
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New VAT guidance on mixed sponsorship and donations including use of charity name and charity of the year arrangements
8 May 2019
- Corporate sponsorship compared to donations – VAT
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HMRC updates Sponsorship VAT Notice
23 January 2019
- Corporate sponsorship compared to donations – VAT
- Older posts
Events
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Commentary
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Commentary on Revenue & Customs Brief 10 (2022)
- Graham Elliott
13 June 2022
- VAT
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Payroll Giving Week
- CRUK
9 February 2022
- VAT
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Hostel accommodation for the homeless – exempt or VATable?
- Socrates Socratous
17 January 2022
- VAT
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Thoughts on the new “Tax Day”
- Graham Elliott
10 December 2021
- VAT
- Older posts
News
-
Approved Mileage Allowance Payments – update from HMRC
1 July 2022
- VAT
-
CTG Expert Insight Session – the relationship between charities and their tax advisers
16 June 2022
- VAT
-
Business Rates Revaluation 2023: Consultation on the transitional arrangements
6 June 2022
- VAT
-
Revenue and Customs Brief 10 (2022): VAT — business and non-business activities
6 June 2022
- VAT
- Older posts
Consultations
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Flexible Working consultation
27 September 2021
- VAT
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Consultation on Government engagement with business and civil society groups on implementation of the Trade and Cooperation Agreement
25 August 2021
- VAT
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R&D Tax Reliefs – CTG consultation response
2 June 2021
- VAT
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Simplifying the VAT Land Exemption – call for evidence
12 May 2021
- VAT
- Older posts
Press releases
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Charity Tax Group (CTG) offers one-year funded membership contributions to London based charities
18 February 2022
- VAT
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Charity shops denied lockdown grants due to the unnecessary application of EU rules
26 February 2021
- VAT
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New research shows charities lose nearly £2bn a year in VAT
3 December 2020
- VAT
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HMRC issues important Brief on VAT and digital advertising by charities confirming that location targeting services can be zero rated
8 September 2020
- VAT
- Older posts