HMRC guidance on the VAT treatment of grants and contracts updated

After a long period of development, HMRC has published updated replacement guidance on the VAT treatment of grants and contracts.

CTG’s VAT Expert Group was invited to comment on a draft of the guidance and overall we feel it is an improvement, particularly the sections on indicators of the supply position and related factors to help determine whether the payment is consideration for a supply or not.

CTG is now in the process of reviewing the final version of the guidance and will continue to engage with HMRC where some of our suggestions have not been progressed.

We would welcome feedback from members on the updated guidance (to and have published a detailed commentary on the changes here. Sections of the Charity Tax Map online will also be updated in due course.

HMRC internal manual: VAT Supply and Consideration

VATSC51600 – Consideration: Payments that are not Consideration: Grants