New definition of 'charity' for VAT purposes
Since the last edition of Charities newsletter, HMRC has announced a change to the definition of 'charity' for VAT purposes. From 1 April 2012, the definition for VAT purposes is the same as the definition given for charities that claim gift aid.
In order for a charity to obtain VAT relief on the purchase of certain eligible goods and services, a charity will need to ensure that it meets the new definition in order to provide the relevant certification required by the supplier for zero-rating.
More information on the new definition can be found on HRMC's website at www.hmrc.gov.uk/news/charity-definition.htm
Cost-sharing exemption
HMRC has published draft legislation relating to the implementation of the costsharing VAT exemption. The legislation will be enacted when the Finance Bill receives Royal Assent in the summer.
Budget round-up
This year's Budget contained some VAT changes that will be of interest to charities. The zero-rating of approved alterations to certain listed charitable and residential buildings is to be withdrawn from 1 October 2012. HMRC will, however, extend the grant scheme currently offered by the department for culture, media and sport to reimburse an amount equal to the VAT charged on alteration works to listed places of worship.
The reduced VAT rate (currently 5%) for the installation of energy saving materials in certain charitable buildings will also be withdrawn, but not until 2013.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.