- HMRC has issued a reminder to UK charities about VAT treatment for non-business income
- Charities need to differentiate between business and non-business activities for VAT recovery
- Many smaller charities are unaware of their non-business activities affecting input tax claims
- VAT on purchases can only be treated as input tax if used for business purposes
- Charities must apportion VAT if goods or services are used for both business and non-business purposes
- Tax expert Bryn Reynolds mentioned the complexity of distinguishing between business and non-business activities
- The Wakefield College case introduced a two-stage test to determine business activity based on consideration and remuneration
- Charities should carefully consider their activities’ nature and ensure correct input tax apportionment
- HMRC advises charities to seek professional advice due to the complexity of VAT issues
- Charities that have overclaimed input tax on non-business activities should notify HMRC and may face penalties
Source: pinsentmasons.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
