For charities, one major challenge has always been how to establish whether income is non-business income, and so outside the scope of VAT, or business income subject to VAT rules (although potentially exempt).
For years, the principles laid down in the case of Lord Fisher have been relied on, with 6 criteria to be considered.
On 1 June, HMRC released a brief setting out a 2 stage test to be used instead.
This is a significant change and the brief should be read by any not-for profit organisations.
As you may be aware, HMRC has had a huge backlog, particularly in the option to tax department. Recently, taxpayers have been experiencing delays of several months before getting a reply.
From 30th May, a new trial has begun, intended to last 6 weeks, with the aim of speeding up the notification process.
Before the trial, when an option to tax notification was received, HMRC would carry out a number of checks.
During the trial, HMRC will continue to acknowledge the notification but will no longer acknowledge its validity. As such, the option to tax acknowledgement letter received from HMRC will become an acknowledgement of the receipt of the option to tax from the taxpayer.
UK Certificate of Status
On 1 May 2022, HMRC updated its guidance on requesting a certificate of status to provide to overseas tax authorities. From 1 May 2022, HMRC will normally issue the certificate by email.