by Meera Rajah
Partner
15 January 2025
Articleby Meera Rajah
Partner
HMRC have recently proactively written to several small to medium VAT registered charities to remind them that if they have “non-business” activities, they must restrict VAT recovery on input tax. Non-business activities are those that are freely provided, without charging a fee to the recipient. Examples include an animal rescue centre funded by donations, or a charity that provides care to the homeless funded by grants. The activity could be funded by grants or donations, legacies or investment income. The method of apportionment, termed by HMRC as a business/non-business calculation is not fixed, but rather the only condition is that it is fair and reasonable.
The Indirect Tax team at James Cowper Kreston can explain whether your activities fall within the HMRC definition of “non-business” and if so, how best to legitimately minimise the restriction of input tax recovery.
For more information, please contact one of our Indirect Tax team members here.