Charity VAT updates – April 2021

Charities should note the following recent developments.

  • VAT practical issues working group – expressions of interest requested: CTG’s Gift Aid practical issues working group has grown from strength to strength over recent years, highlighting the value of charity staff sharing experiences and best practice. CTG is keen to understand whether there would be interest in a similar forum for charity staff working on VAT issues. If you are interested in participating in such a group please contact [email protected].
  • Partially exempt VAT registered businesses affected by coronavirus: A new HMRC brief outlines an accelerated process for VAT registered businesses to request temporary alterations to their partial exemption methods (including combined methods) to reflect changes to their business practices because of the coronavirus (COVID-19) pandemic. This brief will be of interest to partially exempt charities whose trading activities have been affected by coronavirus, as a result of which their existing partial exemption method does not provide a fair and reasonable result. Read more here, including comment from CTG’s Technical Adviser, Graham Elliott.
  • VAT and value shifting consultation: CTG has responded to HMRC’s consultation on VAT & value shifting which raised a number of questions for charities offering “packages” of goods and services. The full response can be read here.
  • Balhousie VAT case: CTG’s Technical Adviser Graham Elliott, has written a commentary on the Supreme Court’s decision in Balhousie VAT case. The case concerns the application of the ‘clawback’ provisions that apply where the construction or purchase of a new building was made on a zero rated basis, and the building is later disposed of, within the first ten years of life.
  • Future of VAT survey: Charities and advisers are encouraged to complete this short survey published by EY – closing 31 May – on the future of VAT in the UK. CTG will be meeting the team behind the survey later this month.
  • VAT manuals on Government funding: HMRC has updated the following VAT manuals. This follows an approach by CTG to HMRC requesting clarification on the VAT treatment of humanitarian and associated research funding – read more here. CTG is reviewing the published guidance and how this compares with earlier drafts and discussions with officials – please send any comments to [email protected].
    • VATGPB3500: Non-business activities: grants and statutory contributions
    • VATGPB5900: Government departments and health bodies: supplies to departments and health bodies