VAT

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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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Defining ‘Protection’ for the purposes of the VAT Welfare Exemption

HMRC updates guidance on the VAT Tour Operators Margin Scheme (TOMS)

Round-up of parliamentary questions – Summer/Autumn 2019

Introduction of the VAT domestic reverse charge for building and construction services

Tax updates

HMRC updates guidance on the VAT Tour Operators Margin Scheme (TOMS)

VAT zero rating of transport of disabled passengers

New VAT guidance on mixed sponsorship and donations including use of charity name and charity of the year arrangements

HMRC updates Sponsorship VAT Notice

Events

Commentary

Defining ‘Protection’ for the purposes of the VAT Welfare Exemption

Introduction of the VAT domestic reverse charge for building and construction services

Relevant Charitable Purpose for Nurseries? Review of the Yeshivas Lubavitch Manchester VAT case

Charity Authorised Investment Fund (CAIF) – the authorised fund vehicle specific to the charity sector

News

Round-up of parliamentary questions – Summer/Autumn 2019

HMRC guidance on VAT refunds schemes for certain charities updated

Irish VAT refund scheme for charities

VAT treatment of energy-saving materials and heating equipment

Consultations

Call for evidence on simplification of VAT Partial Exemption and the Capital Goods Scheme

Making Tax Digital: Data requested on activities of volunteer fundraising branches

Changes to the reduced VAT rate for energy-saving materials

Consultations update – November 2018

Press releases

CTG welcomes the publication of the Charity Tax Commission report

Charity Tax Group responds to Autumn Budget 2017

CTG secures charity exemption to 45% tax on restitution interest

CTG responds to Budget 2017