VAT Relief for Charities

Mummy_Jo

sonicshelly wrote: »

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 ?

I too am confused by this but I think - and I could be wrong... If you present your suppliers with a VAT exempt certificate then they can deduct the VAT charged to you. Alterntaively I guess you could claim it back. If you are a registered Charity you can get this certificate from HMRC

We are still in holidays at the moment so I will have to wait till we go back to school but I am asking everyone I know and I have a call back with the technical team at HMRC. I might take all our stuff associated with the PTA down to the local HMRC offices and camp out there in there guidance centre (probably called something else now) and wait till one of their advisors is free and get them to talk me through it all

Savvy_Sue

Some forms of advertising on behalf of a registered charity are VAT exempt, eg when we advertise jobs in print media.

Can't remember about other things, I don't think we pay VAT to print our annual report, or is it our leaflets, or even both, but we do pay it for headed paper.

Mummy_Jo

Savvy Sue - Thanks for all your replies... Can I just ask what is the nature of your Charity? Like I mentioned yesterday, I am learning more every day. I might end up sitting on the floor in waterstones one day with a few books to see if I can get any more answers or camping out in the local Tax office...

Can anyone answer me this question... If we do decide to register for VAT early (we do predict that we will hit the threshold in a few years, if we had sold all of the tickets to the Ball this year we would have been within £4000 closer just on this event and the Ball is normally sold out!) is it a lot of work and could we end up losing out?

I know the above question is a bit like how long is a piece of string but I am assuming that as most of our income comes from fundraising events that will be zero rated... - could be wrong on that one though.

Jo

fengirl_2

First of all, your local tax office does not deal with VAT, so you are wasting your time even going there. This is dealt with in specialist offices of HMRC.

As in all things complicated, I turn to the invaluable Voluntary Sector Legal Handbook, in which there is a whole chapter dedicated to VAT, written in Sandy Adirondack's usual clear way. Suggest you consult this at your local library or CVS, or if you PM me with your address, I will photocopy the chapter and send it to you.

You then need to consult your accountant on the matter - don't expect him/her to just pick up on it when doing the accounts.

Savvy_Sue

fengirl wrote: »

As in all things complicated, I turn to the invaluable Voluntary Sector Legal Handbook, in which there is a whole chapter dedicated to VAT, written in Sandy Adirondack's usual clear way. Suggest you consult this at your local library or CVS, or if you PM me with your address, I will photocopy the chapter and send it to you.

Can it not be consulted online? Certainly worth giving Sandy's legal updates a plug ...

fengirl_2

VSLH cannot be consulted online (or how would Sandy make a living?), but you can sign up to her updates at www.sandy-a.co.uk.
(Are you trying to put us poor consultants out of a job, SS?)

JasonLVC

Mummy_Jo wrote: »

Savvy Sue - Thanks for all your replies... Can I just ask what is the nature of your Charity? Like I mentioned yesterday, I am learning more every day. I might end up sitting on the floor in waterstones one day with a few books to see if I can get any more answers or camping out in the local Tax office...

Can anyone answer me this question... If we do decide to register for VAT early (we do predict that we will hit the threshold in a few years, if we had sold all of the tickets to the Ball this year we would have been within £4000 closer just on this event and the Ball is normally sold out!) is it a lot of work and could we end up losing out?

I know the above question is a bit like how long is a piece of string but I am assuming that as most of our income comes from fundraising events that will be zero rated... - could be wrong on that one though.

Jo

What is the legal status of the PTA?. I assume it is either a registered charity or a company limited by guarantee (or similar).

If that is the case, your ticket sales for the dinner/dance would be exempt for VAT purposes (under the charity exemptions rules). As the event is an exempt (fund raising) one, it means you cannot charge VAT on the tickets, nor reclaim any input tax.

If the PTA is not a charity or similar then the ticketed event would be standard rated as dinner/dances are standard rated when hosted by a non-charitable organisation.

So, you can register for VAT any time you like (once you hit £70k you HAVE to register mandatory), but what is more important here is WHAT are you selling/income. If it is all exempt, it doesn't count towards the £70k and you are not allowed to register for VAT. If it is all standard rated, then you charge VAT on your tickets (making them dearer) but can reclaim the VAT on your event costs.

On your original post, a charity cannot obtain services of catering or hotel venue hire free of VAT - these would all be standard rated supplies to the charity body. A zero rating (or exemption) certificate can only be issued by the charity where zero rating is applicable - this mostly concerns construction of property and some services such as advertising and printed matter.

Mummy_Jo

Brilliant! - Thank you - things are slowly becoming clearer.

The PTA is a registered Charity. I wasn't the treasurer last year but I can remember some basic facts from the accounts in that the Annual Turnover is about £55 000 - of which £45 000 is from the one event. The rest is raised through other much smaller events and donations throughout the year. I assume then that all income would be exempt (under the charity comm guidelines) from VAT given this...

Could we still register for VAT in order to be able to claim back the VAT incurred on event costs and things purchased throughout the year given that probably 99% if not 100% of the income is likely to be VAT exempt?

Jo

From what I have understood from your post JasonLVC the answer to my question is probably no...

Mummy_Jo

fengirl wrote: »

As in all things complicated, I turn to the invaluable Voluntary Sector Legal Handbook, in which there is a whole chapter dedicated to VAT, written in Sandy Adirondack's usual clear way. Suggest you consult this at your local library or CVS, or if you PM me with your address, I will photocopy the chapter and send it to you.

Thanks I will certainly look this book up when I go into town on Friday.

Thanks everyone for your help I do feel like I am learning more and more with every post which is great.
Jo
xxx

Savvy_Sue

fengirl wrote: »

VSLH cannot be consulted online (or how would Sandy make a living?), but you can sign up to her updates at www.sandy-a.co.uk.
(Are you trying to put us poor consultants out of a job, SS?)

:rotfl: Perish the thought! No, it's just that there's so much on her lovely website, I wasn't sure what was and wasn't there. And don't worry, we've bought her books and pay for her updates, that's how good we think they are! :rotfl:

Also I wasn't sure about the copyright implications of photocopying a whole chapter.

while we're talking about excellent sources of information, I shall mention the Independent Examiners, who also do a (roughly) monthly update which is always worth a read, if only for the "And finally ..." section.