What types of charity income streams are subject to VAT?

For a transaction to be subject to VAT, it must normally meet both of the following conditions:

  • It must be a supply of goods or services
  • The supply of goods or services must be ‘in the course or furtherance of a business activity’

A supply is an exchange transaction in which goods or services are provided in return for consideration. A transaction is not a supply if:

  • A payment is made but nothing is provided in return. For example, a donation is a payment but without any goods or services provided in return
  • There is no consideration. For example, goods or services are provided free of charge
  • Goods or services are provided but any consideration is voluntary. For example, a street musician solicits donations from passers-by.

Want to discuss it further?

Helen Elliott

Partner

Ross Palmer

Senior Tax Manager

Gillian McKay

Senior Tax Manager

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