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When are charities’ activities within the scope of VAT?

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This guide focuses on two fundamental questions which arise when determining whether a charity’s activities fall within the scope of VAT, namely whether they are carrying on a business and whether they are making ‘supplies’ in the course or furtherance of that business. Charities will be in ‘business’ for VAT purposes when acting otherwise than as consumer, even if their activities pursue charitable aims. True donations and grant funding will fall outside the scope of VAT, but care should be taken to ensure that such funding is not made subject to conditions which turn it into ‘consideration’ for VAT purposes.

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