Charity business activities and VAT registration
Charity business activities and VAT registration

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

  • Charity business activities and VAT registration
  • Registration
  • Business activities

There is no general relief for charities in respect of VAT chargeable on supplies made by them. Equally there is no relief for them in respect of supplies to them. However, zero rating may apply and there are some exemptions and concessions that may apply to supplies by charities.

Charities can carry out both primary and non primary purpose trading activities. In the first instance trading would be carried out in the course of their charitable purpose and in the second instance activities would be used as a supplemental way of raising funds.

Charities are not permitted to carry out non primary trading to any great extent unless they set up subsidiary trading companies. If they do this they will lose any VAT advantages that may be enjoyed by the charity unless the charity and the subsidiaries are all VAT registered and can be registered as a VAT group.

It is important to make a distinction between ‘trading’ and ‘business’. Trading by a charity will normally fall under the heading of business but for VAT purposes the normal fund raising activities of a charity may also be classed as VATable business.

Registration

All businesses that make taxable supplies in excess of the VAT threshold (£79,000 at April 2013) have to be registered. In this context taxable supplies are business transactions that carry