Are you associated with a charitable organisation and finding it complicated to handle the VAT? Well, you need to be aware of the exact implication rules of VAT when you are running a charity. This can further help you to keep HMRC on your favourable side. People often enquire, can charities claim back vat. If you are wondering the same, this guide is just the right search for you.

As we have outlined a discussion about the basics of everything that you might need to know about whether charities are exempted from tax implications, what is the procedure to get registered for VAT, whether can charities claim back VAT, and what is VAT relief for charities.

Talk to our best accountants and bookkeepers in the UK at CruseBurke. You will get instant help about whether can charities claim back VAT. 

Is there any Truth in Charities being Exempted from Tax Implications?

The simple put about this is that charities are not exempted from VAT. Just like the set of rules requires the non-charitable organisation to get registered for VAT, the rule stays the same with the charitable organisations as well. However, if the charitable sales are not over the certain limit of VAT thresholds, then there is no need to get registered for VAT with HMRC. If you are a beginner in this regard, you first need to learn the basics about the procedure of getting registered for VAT with HMRC.

Charities Registration for VAT

Once the process of getting registered for VAT, the charity can begin to charge VAT on the products and services that it offers to people. A VAT return is also required to be submitted after event for three months. MTD-compliant VAT software is a great help in this regard. If you are wondering how much you must charge for the products, you can even use the online calculator to figure out the right calculations.

Moreover, if the sales of VATable products are below the figure of £85,000, a voluntary VAT registration process can be initiated. This will be helpful in the future to make a claim for the purchased supplies and another relevant cost.

Can Charities Claim Back VAT?

When your charity organisation is VAT registered and also paying the standard rate of VAT, there are chances that your organisation will qualify to reclaim VAT. Be clear of the fact that if a charity organisation is not registered for VAT, it can not claim VAT that is charged on the services and products. This is the reason, the professionals always suggest going for voluntary VAT registration because you will be in a position to reclaim VAT in the future. There are a few conditions for the VAT-registered charity organisation that are to be considered before reclaiming VAT. These are outlined below:

1. The purchase services and products must qualify for the zero rate or reduced rate.
2. The products come under the category of charity discounts.
3. The charity organisation must be recognised by HMRC and associated with the charity commission.

Once you are sure that you meet certain considerations and you do qualify for the VAT reclaim, know that your past four years will be considered only. The good news is for if you are paying the standard rate, you can enjoy the VAT reclaim amount.

What is VAT Relief for Charities?

Sometimes when charity organisations are not registered for VAT, they can still ask the suppliers to charge the reduced rate or the zero rate on the products and services. The goods that a charity organisation imports from outside of the EU are exempt from the VAT payment.

The Bottom Line

Now that you have gathered a fair amount of information about whether can charities claim back VAT, we can bring the discussion towards wrapping up. It becomes tricky to handle VAT when a charity organisation is not registered for VAT. Therefore professionals always recommend opting for voluntary VAT registration.  This will benefit you to reclaim VAT in the future. However, it is important to have a clear understanding of the qualifying criteria before you hop on to any procedure as a beginner. We hope these few minutes of reading will help you to develop a better understanding of whether can charities claim back VAT and how can you make a choice that turns out to be the most beneficial to your unique circumstances.

Are you seeking professional help to know if can charities claim back VAT for a small business? Why not get help from the experts at the CruseBurke? Talk to us now!

Disclaimer: All the information provided in this article on whether can charities claim back VAT includes all the texts and graphics. It does not intend to disregard any of the professional advice.