An introduction to charity VAT - five things to take away.

Take a look at our five main points from our recent introduction to charity VAT event. 

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Thank you for attending our first charity VAT event in 2019, we're really glad that so many of you made it on the day, and hope you found answers to your questions. From the feedback we had on the day and since the event, we've put together some useful points for you to take away to give you a steer on dealing with your VAT.

If you have any further questions, please give us a call.  


Five things to take way from the event:

  • Do we know the VAT liability of the supplies made by the charity – this affects not just the VAT that might be payable but also the entitlement to VAT recovery 
  • Is our organisation maximising the use of zero rate reliefs – As most charitable organisations can’t recover VAT, the best way of mitigating the cost is not to be charged VAT in the first place where possible
  • Is the VAT recovery method fit for purpose and when was it last reviewed – changes in activity or structure might mean that the existing VAT recovery method is no longer producing a fair and reasonable result 
  • Do we have land/property transactions to consider – projects of this nature invariably involve large potential VAT costs and any opportunity to reduce the VAT cost requires planning from the outset  
  • Are we ready for Making Tax Digital – Whilst HMRC are taking a light touch to penalties during the ‘soft landing’ period, it will be important that organisations use this period to acquaint themselves with the long term requirements of digital record keeping.


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You might also be interested in… Making Tax Digital Update - May 2019.

About the author

+44 (0)20 8037 3114

Making Tax Digital for VAT (MTD) came into force on 1 April. If you have not taken any steps to check the requirements and determine what needs to be done, there is still time, because unless you are on monthly returns the earliest VAT returns affected will be due in August this year, but we would strongly recommend taking action now.

If your charity is VAT registered and makes taxable supplies above the VAT registration threshold of £85,000 in any 12 month period , MTD will apply. There is a six month deferral from 1 April until 1 October for a small number of more complex businesses, and those registered in VAT groups but unless you have a deferral letter from HMRC your start date is 1 April.

For businesses submitting VAT returns on ‘calendar year’ quarters, the first VAT return affected will be due for filing in early August 2019. Therefore, for many charities affected by MTD, there is still time to investigate software options for complying with MTD.. It may be the case that you can update your existing accounting software or, alternatively, purchase ‘bridging software’. Buzzacott have bridging software available for a nominal fee which allows VAT return information to be submitted to HRMC using a spreadsheet. Talk you your usual Buzzacott contact or complete the form below. 

Simplification for charities 

HMRC have added a new section to the Making Tax Digital VAT Notice, relaxing the requirement for charities to use digital links when reporting on fundraising events. Often these events are run by volunteers and with limited internet/computer access, making it impractical to maintain digital links between the individual supplies that would need to be recorded separately in digital records. Therefore, HMRC will accept that charities can record all supplies made at fundraising events run by volunteers as if they were a single invoice in digital records, and similarly all supplies received at the event can be treated in the same way. This concession does not apply to events run by staff.

View the full version of the updated VAT Notice 700/22: Making Tax Digital for VAT here.