VAT Relief for Charities

Mummy_Jo

Hi all

I am hoping that someone might be able to answer some of my questions...

I am the new treasurer for a school PTA with an annual turnover of nearly £50 000.

Every year we have a Ball to raise funds and we pay VAT on the catering - which is a significant sum...

On Friday evening I was digging around on the HMRC website and uncovered the following...

VAT relief on purchases: introduction

If you're a charity you may be able to buy the goods and services listed in this guide without paying VAT, or paying the reduced VAT rate of 5 per cent. The goods or services may have to meet certain conditions, and there may be restrictions on what they are to be used for.
Most of these VAT reliefs on purchases are available only to charities themselves - not their subsidiary trading companies or any other not-for-profit organisations. However, there is VAT relief available on certain medical, veterinary and scientific equipment purchased with charitable or donated funds by certain eligible bodies (certain charities and other organisations such as research institutions whose activities are not carried out for profit). This relief is also available for anybody purchasing the qualifying goods for donation to an eligible body. For more details see the section below ’Charity-funded medical, veterinary, scientific and rescue equipment and ambulances’.


I have phoned the helpline but didn't get a sensible answer from them. The girl was a bit clueless. I know we can get VAT relief from Income but this also indicates that we may be able to get VAT relief from Purchases. I can not find a list of which things class eligible purchases for VAT Relief though and whether the catering is part of that. We are not VAT registered and I am unsure whether it would be worth doing...

I would appreciate any thoughts and comments on this]

Thanks in Advance

Jo

System

I think it only applies to the items mentioned in that guide, that is why it states "goods and services listed in this guide" (That is the way that I read it)

The guide can be found here

Mummy_Jo

Yeah -
Thanks for replying... I did read this article but I don't fuly understand it... I don't really have any formal training and I am learning on the job...

What I want to know is which purchases in particular can charities be allowed to be exempt from paying VAT?

If the catering is not one of them. At which point do you know whether it is worth applying to be VAT registered in order to reclaim it?

Jo
xxx

System

If you look at the guide then the following are some of the things that are exempt

• Advertising and goods associated with donations
• Aids for people with disabilities
• Construction
• Fuel and power
• Charity funded medical, veterinary, scientific and rescue equipment, and ambulances
• Medicinal products
• Drugs and chemicals
• Lifeboats and certain associated goods and services
• VAT reliefs for purchases and sales abroad

This is what it meant when it stated 'goods and services in the guide'. I do not see catering mentioned anywhere within there.

You can register for VAT any time you like but you would still not be able to reclaim the VAT apart from within the normal VAT structure.

System

I also found a bit on the HMRC website about VAT exemption for fundraising but that doesn't seem to cover exemption for catering either.

http://www.hmrc.gov.uk/CHARITIES/vat/fundraising.htm

System

Doesn't the PTA retain an accountant? They would be the people who should know

fengirl_2

There is no relief from VAt on the catering for your event. You will need to factor the cost into the price of your tickets.

Mummy_Jo

Thanks guys for your replies I have broadened my knowledge but it is still a steep learning curve...
I saw a section on the website about Balls and catering but when I've looked back it was in relation to Income - so I am guessing that means if we were to serve food and charge on the night per item we could claim VAT relief on the income...

In organising the one single event (the ball) we pay nearly £5000.00 in VAT. - not just for VAT though. How would I go about working out whether it is in our interest to register for VAT early- we expect to be about £16000.00 short of the threshold this year but next year we are predicting to be within £10 000! - if the threshold remains at the same level.

From what I can work out we can get VAT relief from Income for 15 fundraising events in any one year and we have about 6 so we are within that margin but I am concerned that to potentially save £5000 in Expenses we may lose the equivalent elsewhere.

I am wondering if there are any Chairities on this forum that have done this and I am wondering if it works for them...

Thanks once again

Jo

Savvy_Sue

!!!!!! wrote: »

Doesn't the PTA retain an accountant? They would be the people who should know

IME very rare for the PTA to 'retain' an accountant! May be worth asking the school bursar or whoever deals with VAT within the school if they can make more sense of it all.

System

I was thinking more along the lines of an accountant that they use for end of year etc rather than one retained on a (monthly for example) fee.

sonicshelly

I was wondering this too, as we have just set up our charity. We have ordered wrist bands, pin badges, charity collection pots etc and only one of the suppliers has taken off the VAT?
When I asked one supplier they said they are registered for VAT so HAVE to charge it ?
So this is why I find it very hard to understand, as one supplier has deducted the VAT and another has said they can't as they are registered to have to charge it.
I thought these items would count as they are "advertising and goods associated with donations" so very confused ?