Sector summary ― charities

Produced by a Tolley Value Added Tax expert
Value Added Tax
Guidance

Sector summary ― charities

Produced by a Tolley Value Added Tax expert
Value Added Tax
Guidance
imgtext

This guidance note provides a summary of key VAT issues of relevance to the charity sector.

Areas covered include:

  1. an introduction to the sector

  2. the VAT meaning of a charity

  3. business and non-business activities

  4. the link between supply and consideration (including grants, donations and sponsorship)

  5. the VAT liability of a charity’s business supplies

  6. registering for VAT

  7. VAT reliefs for charity expenditure

  8. land and property

  9. the implications of incorrectly claimed VAT relief

  10. VAT recovery — including non-business expenditure, partial exemption and the charity special refund scheme

  11. key case law

Introduction to the sector

Amongst non-VAT specialists there is sometimes, an assumption that charities do not pay VAT or are not really affected by VAT. This assumption is false.

The charity sector faces some of the most complex VAT issues of any part of the economy.

In addition to other considerations, a typical charity will have to make difficult technical decisions about:

  1. whether income is derived from a ‘business’ activity

  2. the

Continue reading the full document
To gain access to additional expert tax guidance, workflow tools, generative tax AI, and tax research, register for a free trial of Tolley+™
Powered by Tolley+

Popular Articles

Loans provided to employees

Loans provided to employeesEmployers sometimes provide their employees with loans, sometimes charging interest and often not, either as part of the reward package or to help the individual meet significant expenditure. For example, it is common to provide loans for the purchase of annual travel

14 Jul 2020 12:11 | Produced by Tolley Read more Read more

Trade or hobby

Trade or hobbyInteraction of hobby farming rules and commercialityFarming has its own set of ‘hobby farming rules’, which historically have stated that a profit must be made every six years. This is known as ‘the five-year rule’, in that there can be five years of losses but there must be a profit

14 Jul 2020 13:50 | Produced by Tolley Read more Read more

Ministers of religion

Ministers of religionMost ministers of religion or members of the clergy are either office-holders or employees and so their earnings are taxable under ITEPA 2003 as employment income and are subject to Class 1 National Insurance.For the purposes of the tax system, a minister does not have to belong

14 Jul 2020 12:14 | Produced by Tolley Read more Read more