VAT and Community Interest Companies

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JulesBee
JulesBee Posts: 6 Forumite
in Small biz MoneySaving
Hi and thank you for reading....

If a community interest company that is VAT registered receives a 'donation' with no restrictions - do we have to pay the 20% VAT over to HMRC as if the donation was income?

Thank you

Julia

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  • UglyJoe
    UglyJoe Posts: 27 Forumite
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    JulesBee wrote: »
    Hi and thank you for reading....

    If a community interest company that is VAT registered receives a 'donation' with no restrictions - do we have to pay the 20% VAT over to HMRC as if the donation was income?

    Thank you

    Julia

    I can't help thinking that with the above question, and the other thread you created today
    http://forums.moneysavingexpert.com/showthread.php?t=5824784
    you really should consult an accountant, as you clearly have no idea.

    In the meantime, if it's a financial donation (freely given, no strings attached i.e. a gift), this would not be a business activity and so would be outside the scope of VAT.
  • daveyjp
    daveyjp Posts: 12,527 Forumite
    First Post Name Dropper First Anniversary
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    There is no VAT on donations.

    You should however take advantage of gift aid.
  • JulesBee
    JulesBee Posts: 6 Forumite
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    JulesBee wrote: »
    Hi and thank you for reading....

    If a community interest company that is VAT registered receives a 'donation' with no restrictions - do we have to pay the 20% VAT over to HMRC as if the donation was income?

    Thank you

    Julia
    :T

    You are right - I don't have any idea and that is why I am asking the community... and I have an accountant already in place both for my own Limited Company and the CIC - the reason I am asking is that I like to have understanding in my head before engaging with the accountants - is that so wrong?
  • Pennywise
    Pennywise Posts: 13,468 Forumite
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    daveyjp wrote: »
    There is no VAT on donations.

    True, but the receipt of donations may well impact on the charity's ability to reclaim input VAT on its expenses as it may bring the partial exemption rules into play. Definitely one for a specialist VAT accountant rather than an internet forum.
  • daveyjp
    daveyjp Posts: 12,527 Forumite
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    Thats why the CIC needs setting up properly.

    One company and accounts for membership payments etc, other Ltd companies and accounts for any trading activities.
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