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Charity New Build and VAT

Cardibach
Posts: 42 Forumite
I wonder if you can help me. I'm a trustee of the local village hall which is registered as a Charity.
We wish to provide a new build extension to the current building and although we are registered as charity we are not registered for VAT. The estimated value of the work is £26 + VAT and to be honest we are seeking to recover the VAT element as its a significant amount for us to find.
If anyone is aware of any way of recovering the VAT we'd be most grateful.
We wish to provide a new build extension to the current building and although we are registered as charity we are not registered for VAT. The estimated value of the work is £26 + VAT and to be honest we are seeking to recover the VAT element as its a significant amount for us to find.
If anyone is aware of any way of recovering the VAT we'd be most grateful.
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Does your charity have its accounts audited / inspected every year? If so, do you have a friendly accountant you could approach for advice? Because it's complicated.
Also I believe your builder should know something about this. I'm wondering if the builder doesn't have to charge it in this situation, rather than you recovering it.
HMRC might be able to advise as well, after all they're the ones who either collect or give back the money.Signature removed for peace of mind0 -
Yes, Sue is right. You don't reclaim the VAT - it is not charged in the first place. There is a certificate you can obtain from HMRC - ring the VAt helpline.£705,000 raised by client groups in the past 18 mths :beer:0
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Savvy Sue you certainly live up to your name. A million thanks from us to you fengirl and timnicebutdim. We may now be able to afford the extension thanks to you lot and hopefully one or two of our fantastic ladies may put a delicious home made apple tart my way if we get the extension.0
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Yes, Sue is right. You don't reclaim the VAT - it is not charged in the first place. There is a certificate you can obtain from HMRC - ring the VAt helpline.0
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Timnicebutdim - well I wish I'd thought of that handle first. Your certainly nice but not dim in the slightest. I've used the link and downloaded the information. I'll start wading through it now. I cannot tell you how much of a weight thats been taken off our shoulders . We were about to scrap the scheme as the VAT was the final straw for the fundraisers. Now we have hope. crossing fingers and whatever the result many many thanks.0
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Sorry to be the one who goes against the advice of everyone else and sorry if that puts a burden back onto your shoulders in terms of project viability. You are entering a very complex part of VAT legislation and precision in explaining your scenario will lead to more precise answers for you.
Your starting point is this detailed article :-
http://www.tax.org.uk/showarticle.pl?id=87
and hopefully this link will work (its a subscription site of which I subscribe but you can usually cheat most sub sites by using google cache :-
http://webcache.googleusercontent.com/search?q=cache:FpBInM_fydIJ:www.tisonline.net/taxreference/vat_las/default.asp%3Fsection%3DLand%2520and%2520Property+village+halls,+vat+2010&cd=3&hl=en&ct=clnk&gl=uk
An extension is NOT a new build for the achievement of zero rating (an extension is deemed an addition to an existing building) and so I'm of the opinion that a straightforward extension will not enjoy the zero rating you are hoping for.
You could build a annexe instead of an extension but there is a precise legal definition of what an annexe is (ie, have own entrance, can run independent to the adjoining building, etc) so you may need to reconsider your design to fit into that definition.
Often, it is cheaper to knock down an old village hall and rebuild from scratch as that would more likely achieve the zero rating, but from the sound of your proposed project costs, this is quite a small extension overall so demolition isn't going to be an option for you.
Other facts that affect the outcome will be who owns the village hall. If it is the LA/Parish Council then they can fund and build the hall and reclaim under s.33 of the VAT legislation, but where the village hall is 'owned' or devolved control by the village/people then that s.33 is not available, even where the LA engage the contractor and pay them directly (and the recharge the cost to the village hall committee) - you'll need to read your trustees constituition to see who actually owns the hall and who has responsibility for it.Anger ruins joy, it steals the goodness of my mind. Forces me to say terrible things. Overcoming anger brings peace of mind, a mind without regret. If I overcome anger, I will be delightful and loved by everyone.0 -
Yes, Sue is right. You don't reclaim the VAT - it is not charged in the first place. There is a certificate you can obtain from HMRC - ring the VAt helpline.
Sorry to contradict Fengirl (:o), the zero rating certificate is not obtained from HMRC. The certificate is not even technically a certificate, it is just a written and signed satement that the customer gives to the supplier that states the works being contracted for are eligible for zero rating. Any sort of statement on customer letterhead will be sufficient provided it states name/addres of customer, name/address of supplier and a description of the goods/services being supplied.Anger ruins joy, it steals the goodness of my mind. Forces me to say terrible things. Overcoming anger brings peace of mind, a mind without regret. If I overcome anger, I will be delightful and loved by everyone.0 -
Hi Cardibach, I wish you all the best with this. Having briefly looked through the info provided by Jason above and the HMRC notice it does seem a rather large minefield unfortunately....(and they say tax doesn't have to be taxing!) As suggested I think HMRC is certainly the first port of call though and possibly other specialist advice as it may involve jumping through hoops so to speak and it could pay off in the end. Failing that perhaps other fundraising avenues could be explored (grants, matched funding, corporate donations etc to offset the VAT cost) if this line of enquiry hasn't already been explored. Good luck.0
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OK Cardibach, you'd better tell us roughly what you're proposing.
I think when we did our church building project we managed to get this for some of the works: we knocked down a freestanding hut and church hall, and built a sanctuary and meeting rooms on that space, then converted the previous 'church' bit into a hall with kitchen. The kitchen serves the meeting rooms and entry space, but each section is capable of independent use and there are separate entrance doors for the conversion and the new build. So we had to pay some VAT but not as much as we might have done. But it's a long time ago and I don't rightly remember.
I think our architect was really on the ball as well, but you have got to be very careful.Signature removed for peace of mind0
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