Vat
Advice to community groups on claiming for VAT when running Cydcoed projects. What is VAT?
VAT (Value Added Tax) is a tax charged by businesses when they supply goods or services within the United Kingdom. Consumers pay VAT on most goods and services, although we may not always be aware of paying it. The standard rate for VAT is 17.5%. There are some goods and services where VAT is at a reduced rate of 5%, for example home heating; some where the rate is 0%, for example food and books; there are some goods and services which are exempt from VAT. If you are VAT registered, you may be able to recover from the Inland Revenue some of the VAT you pay when delivering a Cydcoed project.Can we claim grant from Cydcoed to cover VAT incurred while delivering our project? VAT that can be recovered from the Inland Revenue is ineligible for Cydcoed funding and must be excluded from any cost estimates you provide us when constructing your bid and from your eligible expenditure when claiming grants. This holds true whether or not you choose to recover it. There is no problem in claiming from Cydcoed for VAT on items of expenditure on your Cydcoed project, as long as you are not VAT registered. You need to include the VAT on items in the Works Programme in your bid, and then make a claim in the usual way. If you are VAT registered, some of the VAT you pay might be recoverable.Should we be VAT registered? You must register for VAT if your activities liable for VAT ("taxable supplies") exceed a certain figure per annum (£58,000 as at April 2004). Should the Cydcoed grant be included in our "taxable supplies" figure? No, not normally. The grant from Cydcoed is backed by a contract but this is not a contract for goods or services. It sets out terms and conditions of grant funding and the outputs we expect to be achieved in return for the grant. We would not be contracting you directly to supply work or a service on our behalf. Therefore, it is not relevant to charge us VAT and should not be included in your taxable supplies figure.Things to watch out for. Quotes and cost estimates: Establish whether these include or exclude VAT. Many contractors quote exclusive of VAT. Also, some people that provide cost estimates such as local authority officers are used to recovering VAT and may not include it in the estimates they provide you.Getting other organisations to recover the VAT: It can be tempting to get another organisation that can recover VAT to run your project for you. It seems like this will allow you to avoid claiming VAT from us and so reduce the size of your bid. However, this rarely works, it will either mean you are not in control of the project (and you have to be if we are funding you) or that the organisation you are using to run your project should be charging you VAT in turn. Just be up-front with us about the costs.Further information. VAT is complex and we cannot provide specific, technical advice. Further information is available from: HM Customs and Excise:
http://www.hmce.gov.uk/
Tel.: National Advice Service 0845 010 9000. Alternatively, visit your local VAT Business Advice Centre. Contact details can be found under HM Customs and Excise in the telephone book. National Council for Voluntary Organisations (2004) VAT for voluntary organisations. A step by step guide. Available at www.ncvo-vol.org.uk, Helpdesk: 0800 2 798 798, price £10. Cydcoed, Forestry Commission Wales, 26/01/2005
10a Rhodfa Stryd y Masnachwyr / 10a Commercial Street Arcade
Abertylleri / Abertillery, NP13 1DH
01495 320331, cydcoed.admin@forestry.gov.uk
|