Charities and VAT

[John Wells]

Some charities operate very much like businesses, with public funding, and any VAT payable on equipment can be seen as government claw back.
Many small archaeology groups pay VAT on equipment that they purchase, even if their entire funding comes from subscriptions and individual small donations by members of the public. Is this reasonable?
If your charity is medical or related to animal health, equipment is usually zero rated.
Any thoughts?

[BAJR]

oooooh now there is one for the teeth and chewing brigade

[BAJR]

What would you suggest? VAT reclaim or VAT exempt. and how to decide who did and did not pay VAT? When your charity buys goods and services you will normally have to pay VAT just like anyone else. However, there are some VAT reliefs available for charities on certain goods and services which mean you may be able to buy them at the zero rate or reduced rate of VAT. For example, subject to certain conditions, your charity may be able to buy fuel and power at the reduced VAT rate, pay no VAT on advertising or pay no VAT on certain goods you make available to disabled people. Only charities are entitled to the special VAT reliefs for charities. To get these reliefs you will have to provide the person supplying the goods to you with evidence that you are a charity and a written eligibility declaration or certificate confirming that the conditions for the relief have been met. The charity VAT reliefs apply only to certain goods and services. You will still have to pay VAT on your other purchases at their normal rate. If your charity or organisation is VAT registered you may be able to claim back some of the VAT you are charged from HMRC under the normal VAT rules. See the sections in this guide on ‘Does your organisation need to register for VAT?’ and ‘Reclaiming VAT on your purchases’. Certain goods and services can be zero-rated for VAT when purchased by certain eligible bodies with charitable or donated funds or when purchased by someone else to donate to an eligible body. http://www.hmrc.gov.uk/charities/vat/intro.htm#2

[John Wells]

Not suggesting anything David, apart from the fact that a simpler system would have been nice ;o)
The usual arguement is that you can have front end Gift Aid.
Existing VAT reliefs were permitted as transitional provisions in what is a European Union tax.
EU VAT law does not allow the UK to expand the scope of the reliefs or introduce new ones.
I assume that eventually, reliefs may be reduced or phased out altogether.
That is one way to make the system simpler!

[BAJR]

A simpler system - amen to that.

It is funny those who are exempt to VAT are often those that can compete with those that must charge VAT