Brief 10/2022 reframes HMRC’s approach to determining whether an activity is a business activity for VAT purposes. Instead of applying the test based on the six indicators from the Lord Fisher case, HMRC now favours the two-stage test from Wakefield College which requires that (i) the activity results in a supply of goods or services for consideration and (ii) the supply is made for the purpose of obtaining income therefrom (i.e. remuneration). It is not entirely clear how the second stage of that test applies to charities, although HMRC states that it is ‘not relevant’ whether the supplier is a charity. Nonetheless, that second limb of the test does bring the ‘purpose’ of the supply to the fore, which is likely to be helpful to charities.
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Brief 10/2022 reframes HMRC’s approach to determining whether an activity is a business activity for VAT purposes. Instead of applying the test based on the six indicators from the Lord Fisher case, HMRC now favours the two-stage test from Wakefield College which requires that (i) the activity results in a supply of goods or services for consideration and (ii) the supply is made for the purpose of obtaining income therefrom (i.e. remuneration). It is not entirely clear how the second stage of that test applies to charities, although HMRC states that it is ‘not relevant’ whether the supplier is a charity. Nonetheless, that second limb of the test does bring the ‘purpose’ of the supply to the fore, which is likely to be helpful to charities.
If you are not a subscriber, subscribe now to read this content.
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