Bill Lewis, Consultant at Bates Wells, has written for Charity Financials on the top ten VAT ‘bear traps’ facing the charities sector.

Citing how VAT is “quite possibly the most complex and expensive tax that most charities have to deal with”, Bill’s article provides a useful and concise guide to anyone struggling to navigate the various pitfalls in this area.

In his piece Bill urges charities to bear in mind the following when taking into account the impact of VAT:

  • Not to wrongly attribute an income stream as grant funding when it is in fact a fee for the provision of services.
  • Corporate donors rarely make a donation to a charity.
  • To remember that VAT is due on supplies of services between the charity and its trading subsidiary, unless the two are in a VAT group.
  • Fundraising is only exempt from VAT provided it falls within the fundraising VAT exemption.
  • Education is not always VAT exempt.
  • The VAT exemption for certain medical services and education services only applies where the services themselves are delivered.
  • VAT can only be recovered on costs to the extent the charity makes VAT taxable supplies.
  • The VAT zero rate on charity advertising costs only applies on advertising in general media.
  • When signing a contract watch out for what it says on VAT.
  • To not forget the VAT reverse charge.

Bill’s piece contains much more information on why these are important issues for all charities to bear in mind, so if you’d like to read the rest of this article please click here for further details.