For many charities, VAT can be complex and uncertain.
Particular issues can arise in respect of the VAT treatment of
income which can be difficult to determine from a VAT perspective.
VAT partner, Sean Glancy, looks at the basics of claiming back VAT,
how you can optimise recovery and considers whether there is a way
to simplify compliance by changing the basis of VAT charges for
charities.
VAT in charities
While there are concessions and some reliefs, VAT is normally a
direct cost for charities. This cost arises as charities are unable
to recover VAT incurred in respect of their charitable
(non-business for VAT purposes) activities.
This contrasts with local authorities and other specified
bodies, such as academies, who are able to get full VAT recovery in
respect of their non-business activities. Government departments
can also get recovery of VAT incurred in respect of specified
contracted out services. These refund mechanisms are not available
to charities.
