VAT Change Affecting Charities
A recent development could be of interest to charities and their building suppliers.
HMRC have recently announced proposals to change the VAT rules to remove the generous reduced rating (5% VAT rate) for “energy saving materials” installed in buildings used for a “relevant charitable purpose”. Those installed in residential accommodation don’t appear to be affected, thankfully, so will continue to benefit from the 5% rate, however charities will face higher VAT costs in future on such items. The changes are being driven by the EU and are based on a VAT technicality, effectively forcing the Government’s hand.
Who will be affected:
a) Charities, who will have to pay 15% extra VAT (i.e. the full 20%) in future. They will generally not be able to reclaim this VAT; and
b) Suppliers of these goods to charities who will lose the business or margins as a result.
The change is planned for 1 August 2013:
a) The good news is there is plenty of time for charities to consider purchases and suppliers to prepare costs & margins for the change. Acceleration of any proposed building works may be a worthwhile consideration at this stage.
Date: 24th August, 2012
Articles from this Author
24th July, 2018
Academies Accounts Direction 2017/2018 (AAD)
9th February, 2018
Guidance for charities regarding the changes to the automatic disqualification of trustees rules
30th November, 2017
Legislative changes affecting the Charitable Incorporated Organisation (CIO)
14th November, 2017
Updated guidance for independent examiners (CC32)
For the latest Mercer & Hole news, visit our LinkedIn page mercer-&-hole