Charities and the VAT treatment of specific activities
Charities and the VAT treatment of specific activities

The following Private Client guidance note provides comprehensive and up to date legal information covering:

  • Charities and the VAT treatment of specific activities
  • Zero rated supplies
  • Education
  • Subscriptions
  • Donations and grants
  • Admission charges
  • Fundraising
  • Conferences
  • Aids for the handicapped

It is very difficult for charities to be entirely sure of their VAT position as the listings for zero rated and exempt supplies is extensive and confusing, with the Value Added Tax Act 1994 (VATA 1994) containing numerous schedules each divided into groups with the groups divided into items. Many of the items have detailed notes ('the devil is in the detail').

Areas of particular relevance to charities include:

  1. specific items zero-rated for charities

  2. education

  3. subscriptions

  4. donations and grants

  5. admission charges

  6. fundraising activities

  7. conferences

  8. aids for the handicapped

Zero rated supplies

Information on this subject is found in VATA 1994 Schedule 8 Group 15 which was primarily designed to allow charity shops to sell donated goods without having to charge standard rate VAT. The legislation applies to a number of situations but essentially to the sale by a charity of goods donated to it.

Note that the goods must be donated to the charity for sale to the public. This means that HMRC will not allow zero rating where the goods are diverted for use by the charity and then sold, or in situations where goods are donated for the specific use of the charity and then sold.

HMRC will not allow zero rating where goods are donated to the charity and used to make other goods for sale by the charity.