Value Added Tax (VAT) is a tax on consumer expenditure. It is collected on business transactions, imports and acquisitions.
Most business transactions involve supplies of goods or services.
There is no blanket exemption from VAT for charities but there are concessions available, for example a reduced rate of VAT paid on supplies of fuel and power – where it is a qualifying use.
VAT can only be recovered on businesses (or charities) registered for VAT. For ordinary businesses and the majority of trading subsidiaries all input VAT can be recovered. For community and voluntary organisations it isn’t straightforward, in that income may fall into different categories which may restrict the recovery of VAT.
Help with VAT and more
A range of services provided by WYCAS (West Yorkshire Community Accounting Service) are available to help your organisation with its VAT returns including VAT for small charities and voluntary organisations: A Good Practice Guide.
To find out more contact WYCAS.