A recent VAT Tribunal decision has called into question the longstanding HMRC policy of denying VAT recovery to charities and not-for-profit organisations on costs associated with their investment activities.
The ruling means that charities, businesses with grant funding income, and other VAT registered businesses can reclaim some of the VAT which had previously been disallowed.
Charity VAT tax refunds
The case, which ruled in favour of Cambridge University (v HMRC), has wide reaching implications for other charity and not for profit organisations.
It means VAT previously disallowed on the basis that it was related not to a taxable supply, but to a non-business activity can be claimed as a VAT refund.
Therefore, costs which have been held to be general overhead costs (and as such the associated VAT) can be treated as recoverable in accordance with the organisation’s partial exemption position.
Who can benefit?
This will impact a large number of universities, charitable health and welfare providers, charities in general and other not-for-profit organisations.
Contact us
The claims period will be on a retrospective basis for up to four years, so please contact us as soon as possible to maximise any potential VAT refund before time runs out.
Alternatively, please visit our charity accountants homepage to find out more about our charity accounting and advisory services.
Award-winning chartered accountants offering tax, audit and advisory services.