Simon Bladen
Partner
Plans to simplify how VAT is applied to business donations to charity have been welcomed by Charity Finance Group (CFG), who say the proposals could remove unnecessary barriers and unlock more support for the sector.
What’s being proposed?
Currently, when a business donates goods or services to a charity, they may be faced with a VAT charge. Therefore, in some cases it is more cost-effective simply to destroy unsold goods or avoid giving at all.
HMRC’s current consultation is exploring whether VAT rules could be changed to allow certain charitable donations to be treated more fairly, particularly in cases where the donation has no commercial benefit to the donor. This would bring the treatment of donations more in line with public expectations and potentially encourage more businesses to support charities.
In short, it could mean fewer (VAT) obstacles for businesses who want to help, and more vital goods and services reaching the charities that need them.
CFG’s response: supportive, with clear calls for change
In their response to HMRC’s consultation, CFG welcomes the proposals but urges the government to go further.
They make it clear that simplifying VAT rules on charity donations would not only benefit charities but also align better with the public interest. CFG points out that businesses are often discouraged from giving unsold or surplus items to charity simply because of the VAT implications, which shouldn’t be the case.
Their submission also raises practical concerns about implementation, encouraging HMRC to offer clear guidance to businesses so that the changes, if introduced, don’t create additional confusion or complexity.
A step in the right direction, says Hawsons’ Simon Bladen
Simon Bladen, partner at Hawsons, shared his views for the proposals.
“We have seen with our clients how VAT can act as a barrier for business donations to charity. These proposed changes are a welcome step, and if handled properly, could make a real difference. More clarity and fewer hurdles mean more charities can benefit from the goodwill of businesses.”
We’re here to help
At Hawsons our accountants recognise that not-for-profit organisations have very different requirements from other businesses and are currently exposed to a challenging economic climate.
Our dedicated team of charity accountants fully understands the complex, ever-changing regulatory requirements of the charity and not-for-profit sector. Irrespective of your size we wish to support you to maximise the benefits you could achieve through our specialist professional advice.
Charities & not-for-profit organisations are currently facing extensive changes in their regulatory and legal framework. Given the additional pressures on fundraising, complex tax regimes, internal risk exposure, and stakeholder demands, it has never been more important to obtain specialist professional advice.
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