VAT on a church 5% or 20%

[BruceB]

Reading the EPC on a church thread with interest as a church I gave a quote to 10 months ago has now come back and is looking to move forward.

Are others charging 5% or 20% VAT to churches? It is not crystal clear to me from reading HMRC Notice 708/6 as it requires interpretation of:
"a building used solely for a relevant charitable purpose"
and
"Relevant charitable purpose means use by a charity:

• for a non-business purpose; or
• as a village hall or similarly in providing social or recreational facilities for a local community.

If a charity does not make a charge, its activities are generally non-business."

Once a church starts hiring out rooms might there be a question mark?

Or am I worrying about nothing and it is just 5%.

 

[TedM]

I'd say they would need to be registered with the Charity Commission to qualify. If not then it will be 20%.

 

[BruceB]

On the basis of only a few minutes research, all Parochial Church Councils are, de jure, charities and subject to the [accounting] rules of the Charity Commission. However, only those with annual incomes greater than £100,000 have to register with the Charity Commission.

 

[Gavin A]

On the basis of only a few minutes research, all Parochial Church Councils are, de jure, charities and subject to the [accounting] rules of the Charity Commission. However, only those with annual incomes greater than £100,000 have to register with the Charity Commission.

this, same applies to pretty much all churches.

 

[BruceB]

I think the issue has gone away in that they now tell me there is a scheme for them to relaim any vat paid
Listed Places of Worship - Home page

 

[Worcester]

Be careful, if this is then deemed a a government grant, it won't be eligible for FIT .....

 

[Steve_P]

What rate of VAT do you have to give back? You charge them 20%, they claim back whatever they can. It's a bit like selling stuff to tourists in shops. They still pay the full rate at source but get a refund if they declare it on returning to their own country.

 

[BruceB]

I think you might have a good point there Worcester. I think it probably an unintended consequence of that grant scheme being introduced after lobbying by the Church following the legislative change that removed the zero rating of alterations to listed buildings (Oct 12 implementation iirc). I had better hand off the issue to the Church!

 

[whinmoor]

Have you asked your Accountant for his/her view?

 

[BruceB]

I am my accountant. Sometimes, I find accountants only too willing to take a low risk route rather than properly analyse the legislation.

 

[Gavin A]

erm, I just spotted this in the latest email from RECC

The Treasury has accepted the European Commission’s request to abolish the preferential 5% VAT rate on energy efficiency and microgeneration products for installation in buildings used for charitable purposes.
The rate returned to 20% on 1st August.

Nice of anyone to bother to inform us of this change before it happened.

 

[BruceB]

erm, I just spotted this in the latest email from RECC


Nice of anyone to bother to inform us of this change before it happened.

interesting. HMRC notice 708/6 has not changed yet so we could easily be misled if it is wrong.

Does the RECC email give a reference?