Registration for VAT - if and when?

Registration for VAT can be compulsory or voluntary. Registration may be burdensome, or it may be beneficial. It should certainly be considered carefully.

Charity VAT registration is compulsory if your 'taxable supplies' exceed £73,000 in a year. This limit increases each year. Taxable supplies exclude VAT-exempt activities (such as income from education, health, finance, etc.); and taxable supplies exclude non-business income (such as donations).

The £73,000 threshold applies to any consecutive series of 12 months (ie: not just a calendar year or a financial year).

In some circumstances, a charity may seek registration on a voluntary basis. The main condition is that the charity is also in business, and that it makes, or intends to make, taxable supplies. The main reason for seeking voluntary registration would be to recover VAT incurred on expenses.

Where a number of 'corporate' bodies share common 'control', they can seek Group VAT Registration. This can be helpful where a charity has a subsidiary trading company.

Conversely, in some circumstances, a charity may be registered for VAT where it does not need to be so. Deregistration may be sought. Do note that, where input tax has been recovered on assets, which are still owned by the charity, this may be clawed back on deregistration.

Whatever decisions are made with respect to VAT registration, it is recommended that a written note be retained for the benefit of the Trustees.

Do you have more questions about charity VAT registration requirements or other issues? contact me today or read more about my VAT Consultancy Service.

<< Back to Charity VAT