Commentary

V7.465 Charities—registering for VAT and input tax recovery

Part V7 Tax planning
Part V7 Tax planning | Commentary

V7.465 Charities—registering for VAT and input tax recovery

Part V7 Tax planning | Commentary

V7.465 Charities—registering for VAT and input tax recovery

Registering for VAT

As explained at V7.462, there is no special exemption from VAT registration for charities – if they have made taxable supplies during any past 12-month period that has exceeded the compulsory registration limit or they expect to make taxable supplies exceeding the registration limit in the next 30 days then they have a requirement to register for VAT.

As with profit making entities, there is a potential opportunity for charities to save tax by registering for VAT on a voluntary basis. This could occur if, for example, the charity has mainly zero-rated sales (eg selling donated goods from a shop) and would therefore be able to benefit from input tax recovery on its expenditure.

An important point to remember is that it is only taxable supplies that count as far as the VAT registration limits are concerned. Any income that is exempt or outside the scope of UK VAT is ignored See Example 2.

Example 2

Good Causes Ltd from Example 1 has calculated its income for the previous 12 months as follows:

Mediation

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