What is VAT for charities?
VAT is a complicated area but can be particularly complex for charitable organisations. This brief overview will help you to understand the various VAT implications of running a charity and make sure you stay on the right side of HMRC.
Charities are not automatically VAT exempt. Just like non-charitable organisations, a charity must register for VAT with HMRC if its VATable sales are over the VAT registration threshold. Even if a charity’s VATable sales are below £85,000, it can choose to register for VAT voluntarily in order to reclaim VAT on its costs and this can sometimes be beneficial.
How we can help charities with their VAT
VAT for Charities is always a complex area with the VAT treatment of a piece of income varying depending on how a contract is worded or how a benefit is provided.
We can help by carrying out an annual desktop review of income on a specific charity to ensure it is registered for VAT if they are required to be, or if it is beneficial to be.
We can also help with partial exemption calculations and with agreeing on special methods with HMRC.
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Depending on budget, the review can focus on one area, such as overseas sales, or posting of expenses, or can look at the business as a whole.