Could your charity be owed a significant VAT tax refund?

Could your charity be owed a significant VAT tax refund?

If your charity hasn’t recovered the VAT on expenses incurred in managing investments you could well be due a VAT tax refund.

Charity VAT refundA 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.

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Rouse Partners

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This information has been produced by Rouse Partners LLP for general interest. No responsibility for loss occasioned to any person acting or refraining from action as a result of this information is accepted by Rouse Partners LLP. In all cases appropriate advice should be sought before making a decision.

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