11.4 VAT
It is often stated that charities do not have to pay VAT. This is not accurate. For all but a number of specific items VAT is payable by charities.
Zero rate VAT is applicable on the supply of advertising for fundraising purposes. Printing of a brochure which makes known the aims and objects of the charity would also be zero rated.
VAT rules are very complicated and require appropriate advice on an individual organisation basis.
The Community Accountancy and IT Unit at Voluntary Action Luton provide advice and support on financial management and practice issues for voluntary and charitable organisations. Independent Examination of Accounts is also undertaken by an appropriately qualified examiner. Tel. 10582 706633.
Table of Accounting Audit Requirements
Unincorporated Charities |
Minimum Accounts |
External Scrutiny |
Gross income over £250,000 |
Accruals – SORP |
Audit – Registered Auditor |
£100,000 - £250,000 |
Accruals – SORP |
Independent Examination |
£10,000 - £100,000 |
Receipts & Payments with Statement of Assets & Liabilities |
Independent Examination |
Less than £10,000 |
Receipts & Payments |
Not required |
Charitable Companies
|
|
|
Gross Income over £250,000 |
Accruals – SORP |
Audit – Registered Auditor |
£90,000 - £250,000 |
Accruals – SORP |
Compilation Report |
Less than £90,000 |
Accruals – SORP |
None |
ACCOUNTING AND REPORTING OBLIGATIONS - SUMMARY IN TABLE FORM
Outline accounting framework for unincorporated charities |
|
|
Retention of accounts and accounting records |
Receipts and payments basis of accounts or Accruals accounts? |
Trustees' annual report preparation |
Statutory external scrutiny of accounts |
Registered charities only |
Latest accounts to the public on request |
Receipts and payments basis |
Accruals basis |
Annual return to us
|
Annual report and accounts to us
|
|
Income not over £1000
|
Yes: at least 6 years
|
If preferred
|
If preferred
|
Not mandatory unless registered
|
Possibly, if registered2
|
No3
|
Only if requested by us
|
Yes
|
|
Neither income nor expenditure over £10,000
|
Yes: at least 6 years
|
If preferred
|
If preferred
|
Registered: yes; or if excepted: on our request
|
Possibly2
|
No3
|
Only if requested by us
|
Yes
|
|
Income not over £100,000
|
Yes: at least 6 years
|
If preferred
|
If preferred
|
Registered: yes; or if excepted: on our request
|
Audit2or independent examination
|
Yes
|
Yes
|
Yes
|
|
Neither income nor expenditure over £250,000
|
Yes: at least 6 years
|
Not allowed4
|
Mandatory4
|
Registered: yes; or if excepted: on our request
|
Audit2or independent examination |
Yes
|
Yes
|
Yes
|
|
Income or expenditure over £250,00
|
Yes: at least 6 years
|
Not allowed4
|
Mandatory4
|
Registered: yes; or if excepted: on our request
|
Audit2
|
Yes
|
Yes
|
Yes
|
2. Outline accounting framework for charitable companies |
|
|
|
Companies Act |
Charities Act |
|
|
Retention of accounting records
|
Receipts and Payments basis of accounts?
|
Accruals accounts mandatory
|
Registered charities only
|
Latest accounts to public on request
|
|
|
|
|
|
Annual return to us
|
Annual report and accounts to us
|
|
|
Income not over £1000 |
Yes: 3 years
|
No
|
Yes
|
No
|
Only if requested
|
Yes
|
|
Neither income nor expenditure over £10,000 |
Yes: 3 years
|
No
|
Yes
|
No
|
Only if requested
|
Yes
|
|
Income not over £100,000 |
Yes: 3 years
|
No
|
Yes
|
Yes
|
Yes
|
Yes
|
|
Neither income nor expenditure over £250,000 |
Yes: 3 years
|
No
|
Yes
|
Yes
|
Yes
|
Yes
|
|
Income over £250,000 |
Yes: 3 years
|
No
|
Yes
|
Yes
|
Yes
|
Yes
|
|
