One of Birmingham's leading VAT experts has described 2009 as
the "VAT annus horribilis" for charities and not for profit
organisations - but has said that 2010 could lend a glimmer of hope
although there were potential administrative nightmares on the
horizon.
"2009 was just about the worst year for charities and not for
profit organisations. For many of them, donations were down and VAT
changes caused headaches and in some instances, havoc," said Jason
Croke, VAT Consultant at the Birmingham office of accountancy
advisors Haines Watts.
Charities faced the removal of a valuable staff hire concession
and also an increase in the threshold upon which zero rating could
apply to a new building project. Additionally, a new penalty regime
came into force.
But, said Mr Croke, in 2010 there are opportunities to reduce or
recover VAT charged on electricity and gas.
"The chance to reduce or recover VAT at the standard rate
instead of the reduced rate of VAT, applies whether the
organisation is VAT registered or not. In addition, it is also
possible to reconsider the apportionment between zero and standard
rated membership fees to reduce output tax where appropriate.
Because this can be back dated by up to three years, it could mean
a potential windfall for some charities," said Mr Croke.
In line with other businesses, charities and not for profit
organisations with an annual turnover exceeding £100,000 will
also need to register on-line from 1st April. This year may be the
time to review how VAT impacts upon organisations to ensure
compliance and minimise costs.
"Many businesses are struggling with VAT but charities and not
for profit organisations, which frequently operate on a shoestring
and which have limited resources, are being badly hit," said Mr
Croke.