Keeping Your Charity on the Right Track: Making the Most of VAT
We’ve now reached month 11 of our Keeping your Charity on the Right Track series. This month we take a look at VAT, including how you can maximise the reliefs available, reviewing your charity’s income streams and the VAT treatment of property transactions for charitable purposes.
Month 11: Making the Most of VAT
VAT is often a complex area for charities and one which they can very easily get wrong, potentially resulting in project underfunding or missed opportunities to claim reliefs. As charities grow and develop, their activities may change. They may be able to apply for different types of funding, explore alternative sources of fundraising or need to move to larger premises. With the constant pressure on resources, there is a risk that the VAT implications of changes may not be explored fully, resulting in additional costs or reduced funding. It is therefore important that the VAT treatment of income and expenditure is regularly reviewed, particularly if something new is being considered.
Checklist for Month 11:
- Review expenditure and ensure that any relevant reliefs have been claimed and invoiced correctly. Ensure that any suppliers of services to which reliefs apply are aware that those services are to be zero-rated.
- Review all income streams and ensure that the VAT treatment of each is correct. Is the VAT registration threshold likely to be exceeded?
- Revisit partial exemption calculations and ensure that they are still appropriate and that VAT recovery is being maximised.
- Consider any future plans relating to buildings and construction and take advice.
- Ensure that consideration of VAT is part of a checklist for those individuals producing funding bids or budgeting for projects.
You can read the previous 10 months below:
- Month 1: Is your Board effective?
- Month 2: Reporting to the Board
- Month 3: SORP compliance
- Month 4: Charity Reserves
- Month 5: Is Tax on Your Radar
- Month 6: Are you Making Effective Use of Resources?
- Month 7: Reporting
- Month 8: Internal Audit/Internal Controls
- Month 9: Mitigating Fraud Risks
- Month 10: Cyber Security
Also look out for our 2018 month to month guide ‘11 Key Steps for Trustees, 1 Giant Leap for Your Charity‘ being released in January!
If you have any questions about VAT and how we can help please get in touch with our team on 01903 234094.