Donations and turnover

[Rachel Gardiner-Hill]

Canvassing for opinion - aware that donations to CIC's are liable to corporation tax but would a donation to a CIC be subject to VAT.  Opinion given to us suggests that is counted as such but I wonder what it's relationship if any to trading is, but given that donations are subject to corporation tax I suppose it makes sense.  Thoughts appreciated.

[Andrew Fleet]

Hi Rachel. You are right that it is subject to Corp tax, however if it is a genuine donation (i.e. the person/business making the donation expects nothing in return) then it is outside the scope of VAT. Thanks. Andy

[Rachel Gardiner-Hill]

Hi Andy

Many thanks for replying.

Here is the response for our accountants

2)       Bad news on the donation for VAT – it is included in taxable turnover. Sorry. I took a second opinion on this just to be certain. We both came to the same conclusion based on the actual legislation VAT group 12 & 13 you wouldn’t be an eligible body.

Any thoughts?

Rachel

[Heidi Fisher]

I can't see how there has been a supply for vat purposes as donations are freely given without the expectation of receiving anything in return. As such I would not count them towards business/taxable turnover for vat purposes. They would be non business for vat and outside the scope of vat.

[Rachel Gardiner-Hill]

Thanks Heidi, this is kind of where I was.  Will check with accountants as to their thinking on this.  It's just this donation could push us over the VAT threshold which we don't want.

Rachel