VAT
*Update: Temporary changes to the VAT payments due between 20 March 2020 and 30 June 2020 have been announced to help businesses manage their cash flow as a result of the Coronavirus outbreak.*
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 is a European tax and the UK has to comply with European Union law in respect of it. 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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Charity shops denied lockdown grants due to the unnecessary application of EU rules
26 February 2021
- Press releases
- VAT
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Eynsham Cricket Club VAT case – Another update
- Graham Elliott
26 February 2021
- Commentary
- VAT
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Support the Charity Tax Group (CTG) with a voluntary membership payment
25 February 2021
- News
- VAT
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Supporting organisations to comply with changes to the off-payroll working rules
25 February 2021
- 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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Eynsham Cricket Club VAT case – Another update
- Graham Elliott
26 February 2021
- VAT
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Reasonable Excuse for Relevant Charitable Purpose VAT Relief
- CTG
17 February 2021
- VAT
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The Cost Sharing Exemption and VAT Groups
- Graham Elliott
20 November 2020
- VAT
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Relevant Charitable Purpose – Swanage Sea Rowing Club
- Graham Elliott
29 October 2020
- VAT
- Older posts
News
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Support the Charity Tax Group (CTG) with a voluntary membership payment
25 February 2021
- VAT
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Supporting organisations to comply with changes to the off-payroll working rules
25 February 2021
- VAT
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Listed Places of Worship Grant Scheme renewed
25 February 2021
- VAT
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New monthly bulletin: Charity tax – what you need to know
23 February 2021
- VAT
- Older posts
Consultations
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CTG response – Programme for reducing published Official Statistics
8 February 2021
- VAT
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Consultation on designing a new subsidy approach for the UK
3 February 2021
- VAT
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VAT and value shifting
8 January 2021
- VAT
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VAT Grouping – Establishment, Eligibility and Registration
12 October 2020
- VAT
- Older posts
Press releases
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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
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[Archive] Changes to HMRC policy on ‘digital advertising’ following Charity Tax Group campaign will result in significant VAT savings for charities
30 July 2020
- VAT
- Older posts