VAT Advice for Not-for-Profit Organisations
At The VAT People, our specialist consultants have provided expert VAT advice to hundreds of not-for-profit (NFP) organisations, assisting them in avoiding costly mistakes in this complex area.
With more than 20 years in the industry, we are well placed to assist your organisation with all aspects of VAT planning, regardless of your individual requirements.
Many of our senior consultants have professional experience within HMRC, meaning we can apply our knowledge of the inner workings of the body to give you the most accurate and effective advice. It also means we can help you ensure you remain compliant with HMRC regulations at all times.
Our specialists can help you to understand and manage all of your VAT obligations. For more information about our services, contact us by calling 0333 3635 443 or fill out an online enquiry form and we will be in touch.
How we can help you
VAT for charities and other not-for-profit organisations is a grey area that often needs further explanation due to the fact that the distinction between a ‘business’ and a ‘non-business’ in the eyes of HMRC is not particularly clear.
We can help shed light on this grey area, making you aware of your obligations and providing bespoke assessments and recommendations for your organisation to ensure you have all the knowledge you need.
We offer a wide range of VAT-related services for not for profit organisations, including:
Are there VAT reliefs and exemptions available to not-for-profit organisations?
There are a number of specific reliefs from standard-rated VAT that are included in the UK legislation which a not-for-profit entity may be entitled to use when incurring capital expenditure. We explain these below.
The construction of buildings intended to be used solely for non-business purposes by a charity can be zero-rated, subject to certain criteria being met.
Commercial building to residential use conversion
The VAT liability of converting a building that was formerly used for commercial purposes into a dwelling or a relevant residential purpose building is VATable at 5%. 'Relevant residential purposes' includes home or accommodation for children/students, personal care homes and hospices.
Power and fuel
A not-for-profit business can pay VAT at the reduced rate on fuel and power that is used for non-business purposes. Furthermore, it can pay a reduced rate on maintaining equipment connected with the supply.
This relief applies to non-registered charities, providing charitable status is recognised by HMRC. There are rules on the apportionment of fuel and power used for both non-business and business activities, whether relief can apply to the entire supply.
Relief of this nature extends to the installation of energy-saving materials, such as central heating and insulation in residential accommodation, or in a building used solely for a relevant charitable purposes. Those not-for-profit businesses using electricity or gas wholly or partly for charitable non-business purposes are also entitled to relief on Climate Change Levy (CCL) from standard to reduced rate.
A charity can zero rate the purchase or hire of some vehicles for their use in the not-for-profit organisation's operations. The rules regarding the use of motor vehicles are quite detailed, so such organisations should look into this.
A charity is able to acquire certain advertising services at the zero rate of VAT.
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Get the vital information you need quickly and easily by watching one of our guidance videos - topics include VAT assessments and penalties, VAT for charities, and maximising VAT recovery.