Charities

Charities are often unprepared for the complexities of VAT – that's where Centurion can help to unravel the issues in plain English.

Our Engagement with Charities

The Wales Council for Voluntary Action and the Wales Co-operative are examples of bodies through which charities and social enterprises can access our VAT expert training events at minimal cost. Our VAT blog updates appear through a range of organisations working alongside the third sector including specialist accountancy and consultancy firms such as Broomfield and Alexander and Empower

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Antonia Watson Chief Executive The Wallich
Centurion VAT Charity Sector Testimonial, Antonia Watson Chief Executive, The Wallich

Sector VAT Issues

Charities face the same VAT management issues as any other organisation that starts to trade. A failure to recognise trading income as subject to VAT will result in VAT registration requirements being missed. VAT assessments raised in a charity from historic errors can cause major financial pressures and risk closure.

VAT registration issues clearly are a concern and this is highlighted by continuing lack of clarity on the nature of funding a charity may receive – that classic is it a grant or is it a contract question?

Opportunities do exist as well so it’s important to maximize access to the limited VAT reliefs available and keep up to speed with VAT changes such as in 2015 for the Hospices Sector and in relation the revised VAT guidance on direct mail shots.

Additionally the need to effectively cost in any irrecoverable VAT to grant applications to ensure projects will be fully funded is vital especially when funding projects that relates to property enhancements or acquisitions.

Some large charities generate major streams of business income from their trading activities and therefore require close attention from the VAT management perspective as often this income generation can be in areas of property rental, health & welfare provision, education or lotteries – all areas where a VAT exemption can apply and result in blocked VAT recovery issues.

How Centurion can help

The Charity sector is diverse in its operation and so too are the VAT issues it will face. Common themes do emerge however and the Centurion Charity VAT specialists each bring 30 years of VAT experience to help resolve them..

Our specialist team offer support from bespoke VAT training through to dealing directly with HMRC on behalf of our client. A VAT Health check review may deliver the assurance of good compliance a Trustee is seeking or may equally identify area where VAT savings could exist.

Meet the Team

Within Centurion our core Charity team of specialists are:

Andrea Brindley
Andrea Brindley
Email Andrea
Liz Maher
Liz Maher
Email Liz
Julie Rawlinson-Smith
Julie Rawlinson-Smith
Email Julie

Our team not just advise charity clients but are actively engagement outside of their Centurion roles in volunteer roles within the charity sector – supporting Young Enterprise, Youth Associations, Sporting and School clubs as well as a choral charity.

Centurion VAT also has its own Charity of the Year which is the Welsh Homeless Charity - The Wallich – for whom we recently raised over £1100 at our Charity Quiz night..

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Our Charities Clients

Case study

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How VAT impacts on a Charity’s Structuring plans

This trading company of a charity had been running for some time and at our initial meeting it became clear the service being delivered would only qualify for VAT exemption if supplied by a charity otherwise they would be regarded as taxable for VAT purposes. This brought with it the concern that the level of the taxable income the non-charitable trading company had generated had taken them over the VAT registration threshold some months back. Thus the trading company was facing a VAT bill for under declared VAT on its income plus penalties and interest.

Having identified this concern and discussed its impact both from a VAT and an audit perspective, agreement was reached that actually the services could revert to being delivered by the charity and the trading company served no purpose in the immediate term. As the trading company had effectively ceased to trade we were able to apply to HMRC for an exception from VAT registration  and return the charity to a VAT pain free position without exposure to penalties and interest.

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Sporting Services and Sports Trusts/Charities

With the recent move from local authority to trust control for the provision of leisure and cultural services Centurion has been closely involved in the business planning for a number of leisure trusts. There are a number of VAT compliance aspects to address within these types of arrangements especially as sizeable land assets - leisure centres and sports facilities may be disposed of or leased to the new trust body.

With our expertise across local authorities and charities were have been well placed to work to best VAT effect, for both sides of the transaction, in terms of ensuring a smooth process of transfer. Then our efforts are concentrated on the most effective methodology to put in place for the new trust for partial exemption purposes. Our expertise has led to methods being agreed that generated much higher percentage VAT recovery levels than had been initially expected.