Apr 012013
 

Charities, contrary to popular opinion, are not exempt from paying VAT.  There are some specific exceptions to this rule but before covering them a few important points:-

VAT cannot be reclaimed from Customs and Excise.

VAT does not operate on a refund basis. If VAT is paid on a purchase it cannot ever be reclaimed from the VAT authorities. To claim VAT relief (if it applies) your Panel will need to get the suppliers agreement to issue a zero rate invoice and you will need to complete a separate eligibility declaration for each transaction. You give the eligibility certificate to the supplier who will not charge VAT on your purchase (as long as all the conditions relating to the relief have been met). The VAT notices relating to specific purchases contain eligibility declaration certificates for you to complete.

Giving VAT relief is at the sole discretion of the supplier.

Even if a purchase could be supplied VAT exempt to Remap as a charity a supplier is under no obligation to supply the goods VAT exempt.  Where VAT relief is allowable it is still an administrative chore to administer, many computerised accounting systems don’t recognise it and many suppliers therefore refuse to sell at zero rate.  You are more likely to come across refusal to sell at zero rate with suppliers who do not normally deal supplies to people with disabilities.  You should also bear in mind that it is the supplier, not Remap as the buyer, who carries the risk of interpreting the complex rules incorrectly and who could be fined by Customs and Excise.   Do not expect to be able to walk into Screwfix, order some nuts and bolts and be allowed to buy them VAT free by presenting a VAT exemption eligibility certificate.  If you are considering buying from suppliers who don’t often do these sort of sales you need to talk to someone in authority in the company to get their agreement to supply at zero rate on eligible goods in the first place.

Budget for VAT

When applying for grants etc always remember to include provision for VAT in your request.

VAT notices relating to reliefs for disabled people

The primary document is HMRC Reference:Notice 701/1 (May 2004) do not read this if you are of a nervous disposition or prone to falling asleep.

Panels may be able to obtain VAT relief on purchases of the following goods and services:

This exemption is very limited and applies only to “advertisements” on any subject, including staff recruitment. Charities are expected to only place advertisements which comply with their charitable objects. This relief does not override charity law or the need to comply with the British Codes of Advertising or any other relevant regulations.  It is unlikely that this exemption would apply to Panels normal activities.

Under this relief individual clients may be able to claim VAT relief on certain devices which Panels might need as part of a solution.  The equipment must be purchased in the name of the Client.  The client, or you on their behalf if they are unable to sign the declaration, must complete the form you can find here

If the earlier notices induced fear and trepidation this one will make your eyes bleed.  It is a masterpiece of logical loops within loops and recursive writing.

Broadly, Panels can purchase equipment which would qualify for exemption under Notice 701/1.  It isn’t quite that simple though.  For example buying a pack of bolts for use by the Panel as stock for future projects would not attract VAT relief, buying the same bolts for use on one or more  specific named projects would.

To claim this relief the whole of a purchase (all of any invoice) must be allocated against a specific job number or numbers.  So :-

  • 200 6mm bolts bought for panel stock for use only on future Remap projects – VAT relief cannot be claimed and VAT must be paid at standard rate.
  • 200 6mm bolts bought to replace 200 bolts used on previous Remap projects – VAT relief cannot be claimed and VAT must be paid at standard rate.
  • 200 6mm bolts bought on one invoice for Remap project number SH123 – VAT relief can be claimed and goods zero rated.
  • 200 6mm bolts bought on one invoice for Remap project numbers SH123, 135 and 456 – VAT relief can be claimed and goods zero rated.
  • 200 6mm bolts bought on one invoice, 100 for Remap project number SH123 the rest for panel stock for future use – VAT relief cannot be claimed and VAT must be paid at standard rate.

VAT Exemption Forms for Charities

The VAT Eligibility declaration by a charity form you would fill in on behalf of your panel when buying something for a job for a client can be found here .  The form for individuals with disabilities to claim exemption can be found here.

 

VAT Relief on Mobility Aids for the Elderly

The Value Added Tax (Reduced Rate) Order 2007 introduced a new group (Group 10) for supplies of mobility aids to the elderly (Group 10) at a reduced VAT  rate of 5%.  No disability need be identified as long as the customer is over 60.

The Order amends Schedule 7A to the Value Added Tax Act 1994. Part 2 of that Schedule contains the Groups of supplies of goods and services that are subject to the reduced rate of VAT of 5%.

It will have little impact on Remap operations as it applies only to the person or organisation supplying and installing only the following :-

(a) grab rails;
(b) ramps;
(c) stair lifts;
(d) bath lifts;
(e) built-in shower seats or showers containing built-in shower seats;
(f) walk-in baths fitted with sealable doors.

As the lower rate applies only for the combined supply AND installation of the restricted range of equipment listed in the order and  Remap is not VAT registered Panels cannot purchase materials for the construction and installation of, say, a ramp for an otherwise healthy 60yr old at the 5% VAT rate.   It is included here as it may be of interest to clients who are contemplating having any of the equipment listed above installed commercially by for example a builder who may not be aware of this provision.

The Value Added Tax (Reduced Rate) Order 2007

 

 April 1, 2013  Posted by at 17:30 Remap Documents, VAT and Remap