Water Bubble Banner.

VAT for Charities and Not for Profit Entities.

Not all businesses are alike, and some sectors have specific Indirect Tax service requirements.

We have set out below some key issues that can directly affect charities and not for profit organisations:

  • The VAT liability of income streams.

  • The VAT treatment of grants and donations: whether they constitute business or non-business income and what the VAT liability of income is.

  • The VAT liability of purchases: which can include the identification of areas where reliefs are available.

  • Business/non-business apportionment methodology: a business/non-business apportionment does not have to be based on income values; alternative methods can be used which may reduce a fairer result.

  • Partial exemption methods: The standard partial exemption method is based on an apportionment of income, but this may not reflect the use of input tax in an organisation.  We can help create a methodology which produces a more fair and reasonable result without requiring huge amounts of staff time to operate.

  • VAT structures: we can assist on whether VAT registration is possible/beneficial and whether a VAT group can create benefits by reducing VAT costs or maximising VAT recovery. 

  • Fundraising events: fundraising events can be exempt from VAT, but this does not always produce the best overall VAT outcome.  We can help organisations work out the best VAT position for each event.

  • Property transactions: we can ensure that the correct VAT liability is applied to the acquisition, construction and refurbishment of property and assist clients to optimise VAT recovery, including through capital goods scheme calculations where we can help to create efficient methodologies.   We also assist with the calculation of Stamp Duty Land Tax (SDLT) and VAT implications.  The Domestic Reverse Charge (DRC) is due to be implemented in Oct 2020 and we can advise on the implications for working capital management and contractual issues.

  • Making Tax Digital (“MTD”): businesses now have until their first VAT return period starting on or after 1 April 2021 to put digital links in place.  We have found that the implementation of MTD has been very useful as it has enabled clients to review their charts of accounts and revisit processes and procedures which have been used for many years.  This has been helpful in designing PESMS.

  • Training: we can run VAT training seminars for both finance staff and operational staff who deal with VAT issues e.g. fundraising


FIND OUT MORE ABOUT VAT for Charities and Not for Profit Entities

Trust Dains for specialised Indirect Tax services tailored to your sector's unique requirements. From VAT liability and partial exemption methods to VAT structures and property transactions, our expert team ensures optimal VAT outcomes