VAT News

June 2014 Review of Third Sector Finances announced!

13.06.2014

An article in today’s Civil Society News caught my eye -

“Umbrella bodies to review state of sector finances” it said and made me wonder whether they’d been in attendance at our recent Great Debate event which Centurion VAT delivered in association with Broomfield accountants and the WCVA in Cardiff entitled: “ Funding Gaps - Change or Die?”.

The article outlines a review that NCVO will lead into areas which include the hot topics at our recent debate: the growing role of trading, funding relationships between government and the third sectorin order to provide: ”analysis to enable the voluntary sector to plan for the future”.

I do hope that the umbrella bodies take on board the VAT issues and repercussions that we are increasingly seeing across the third sector from these financial management and funding issues.

Charities that have inadvertently fallen foul of VAT rules that apply to their trading activities and require compulsory VAT registration is a common theme but equally problematic is the changing funding relationship that the third sector has with its traditional funders in the public sector. It’s not all a negative impact though from VAT and often we find that a charitable body whether VAT registered or not - doesn’t proactively explore the VAT reliefs (limited though they are) which can prove a significant benefit to a charity when looking at larger projects - particularly where funding on property assets is concerned.

I’m sure this review will be wide ranging. All of us engaged in the third sector (and I speak as both an adviser and volunteer) recognise that the third sector is continuing to face severe pressures from the changing funding climate. Innovative thinking on fundraising, collaboration on projects, identifying profitable income streams from trading areas all come into the mix. With my VAT hat on my topic areas for the review “to do” list would at least include:

  • VAT registration – compulsory or voluntary
  • VAT grouping or not with subsidiaries?
  • Is it really still grant funding or income for services supplied?
  • Cost sharing or recharges on projects with other entities – VAT implications
  • Fundraising schemes triggering Tour Operator Margin Scheme issues for VAT management
  • Capital projects (lottery funded or otherwise) – managing a VAT Capital Goods scheme item if I spend £250k or more with VAT attached on a build or refurbishment project – 10 year impact for me or not?
  • The Cost Sharing Group Exemption for VAT – is my collaboration with others creating a viable opportunity to use this scheme?

 

So hopefully the brief for this review will be drawn sufficient wide to ensure that these VAT areas get a good airing. I’ll await a call perhaps – always happy to chat VAT as they say!

Commentary provided by Liz Maher, Director of Centurion VAT Specialists Ltd, a six strong team of VAT experts based in Newport and Bristol and the 2013 winner of Taxation’s Best VAT Team in the UK award. Centurion is the largest independent VAT specialist team based in Wales and supports a wide range of sectors including those in the third sector.

 Contact Centurion on: emailus@centurionvat.com or www.centurionvat.com

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