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Where Taxpayers and Advisers Meet

Claiming back VAT on charitable income

WillKS
Posts:2
Joined:Wed Jun 22, 2016 12:49 pm
Claiming back VAT on charitable income

Postby WillKS » Wed Jun 22, 2016 12:54 pm

My orchestra (a registered charity) has just launched a subscription scheme whereby we create a series of benefits (such as behind the scenes videos and small private performances) in return for a patron's subscription.

The purpose of the subscription system is to raise funds for the orchestra's charitable work.

We now realise that VAT needs to be paid on the income gained from this scheme - I'm just wondering if we are able to claim that VAT back at a later stage, given the purpose of the funds raised is for the furtherance of the charities objectives?

Thanks for any help you can give. I'd be happy to provide any more info needed!

Will

jpcentral
Posts:924
Joined:Wed Aug 06, 2008 3:28 pm
Location:Loughborough
Contact:

Re: Claiming back VAT on charitable income

Postby jpcentral » Wed Jun 22, 2016 5:57 pm

The charity must have income from trading activities in excess of the VAT threshold (£83,000 per annum) to be subject to VAT. I assume from your question that you are aware of this and are satisfied that your trading income exceeds this threshold?

If you think your trading is above the threshold, you need to look at some of the things you are providing to see if they are exempt and could therefore take you below the threshold. This is going to depend on how close you are to the threshold. For example, live performances of music of a cultural nature are generally exempt. You mentioned "private performances". If these were somehow to become public, they might qualify for the exemption.

I am not aware of any other exemptions which might apply.

A charity registered for VAT will be able to reclaim some VAT on goods and services supplied to it under the partial exemption rules. This is actually a real pain to administer and work. VAT charged on directly related costs, such as the production of the videos will normally be reclaimable in full.
John Perry
Central Business Services
Loughborough
http://www.centralbusiness.co.uk

WillKS
Posts:2
Joined:Wed Jun 22, 2016 12:49 pm

Re: Claiming back VAT on charitable income

Postby WillKS » Wed Jun 22, 2016 6:01 pm

Hi John,

We're pretty small so our commercial income is well under the threshold. We registered for VAT because we were able to claim it back on some of the costs associated with previous fundraising events.

The set up of the subscription scheme is such that the platform we use charges VAT automatically to our subscribers. Are we then able to claim that back, given we fall below the threshold?

Thanks
Will

jpcentral
Posts:924
Joined:Wed Aug 06, 2008 3:28 pm
Location:Loughborough
Contact:

Re: Claiming back VAT on charitable income

Postby jpcentral » Thu Jun 23, 2016 8:52 am

No, you can't claim it back.

It is probably going to be better for you to deregister. Sounds as if it might need a bit of analysis to be certain.
John Perry
Central Business Services
Loughborough
http://www.centralbusiness.co.uk

section 44
Posts:4467
Joined:Thu Oct 30, 2008 12:47 pm

Re: Claiming back VAT on charitable income

Postby section 44 » Thu Jun 23, 2016 4:50 pm

We registered for VAT because we were able to claim it back on some of the costs associated with previous fundraising events.
It is probably going to be better for you to deregister.
it may be worth considering whether deregistering would create any VAT liability

jpcentral
Posts:924
Joined:Wed Aug 06, 2008 3:28 pm
Location:Loughborough
Contact:

Re: Claiming back VAT on charitable income

Postby jpcentral » Thu Jun 23, 2016 5:12 pm

Agreed. I did say, ".......need a bit of analysis to be certain."

Essentially, don't make a decision until you are certain.
John Perry
Central Business Services
Loughborough
http://www.centralbusiness.co.uk


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