VAT relief is available, but is restricted to the following:
- New Build for non-business use
- Construction of an annexe for non-business use
- Very specific works to facilitate use by the disabled
The ‘non-business’ use caveat is of crucial importance; as any trade (whether commercial or below market rate) can nullify the relief. Did you know that charging community user groups to use a church hall can constitute a ‘trade’? As does billing toddler groups for the electricity they use?
Before commencing a fund-raising drive, or at business case stage; it is prudent to determine what VAT saving – if any – is applicable to the scheme. It may also be worth considering the layout of the new / extended building; as it may be possible to design a VAT efficient annexe as opposed to a Standard Rated extension.
Alternatively, many activities could support VAT recovery; and in these cases it is necessary to compare the VAT saving against the administrative inconvenience of VAT Registration. Charities are waking up to the fact that you do not need to be hard-nosed capitalists to benefit from VAT registration.