Are you maximising your VAT taxable position and minimising your VAT costs?
In the current climate of the gradual removal of specific VAT reliefs, and the increased VAT costs to the not-for-profit sector, it is vital to ensure relief where available is fully utilised.
Whilst an appreciation that VAT at the zero-rate is applicable to various goods and services provided to the not-for-profit sector, it is also important to remember the supplies made by this sector can also benefit from the zero-rate.
This is a summary guide of the main VAT reliefs available to the sector in terms of supplies made by non-profit organisations and those services and goods received. These reliefs will all be subject to criteria and in some case require the provision of a VAT Certificate or an Eligibility Statement.
Below is a summary of the main VAT reliefs available to non-profit organisations:
Zero-rated supplies made charities and not-for-profit organisations
- Sale of donated goods
- Supplies of advertising in brochures and literature for other charities
- Certain passenger transport
- Apportioned elements of membership subscriptions
- Certain apportioned elements of patron and supporter payments.
Zero-rated supplies to charities
- Advertising and goods connected with collecting donations
- Supplies of goods and services which the charity makes available to disabled people
- The first grant of a major interest (freehold or lease exceeding 21 years) in a building or part of a building intended to be used solely (95% or more) for a relevant charitable purpose
- The construction of a building or part of a building and annex intended to be used solely (95% or more) for a relevant charitable purpose
- The purchase of substances directly used for testing, or for mixing with other substances when the charity is engaged in medical or veterinary research
- The installation of energy saving materials
- Equipment for producing ‘talking books’ and newspapers
- Lifeboats, and associated equipment including repair and maintenance
- Certain medical and scientific equipment
- Certain medicinal products to be used in the treatment and care of people or animals
- Certain rescue equipment
- Certain specialist communication, light enhancing, and heat detection equipment when purchased by charities supplying first aid and rescue
- Certain resuscitation training models used in first aid training
The above is a guide and any non-profit making organisation should seek expert VAT advice to ensure VAT costs are minimised whilst VAT recovery in maximised.
