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ARTICLE · 08 DECEMBER 2014

Charity Buildings

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One of the biggest bones of contention in the world of charity VAT relates to buildings and the cost of VAT on new build.

United KingdomTax
Graham Elliott
Graham Elliott
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One of the biggest bones of contention in the world of charity VAT relates to buildings and the cost of VAT on new build.

Put simply, where a charity has to pay a lot of VAT on a building project it will prefer to reclaim it by making taxable supplies (where that is achievable and is a normal commercial situation). Where a charity does not make taxable supplies it would prefer the costs to be zero rated.

Construction of new build property can be zero rated but only where the user is a charity and the activity carried out in the building is not 'business'. But in some cases charities make charges for services which would be exempt if they were a business activity. HMRC tends to say they are a business activity. Charities tend to say they are not.

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