Charities
HMRC have updated its Guidance on VAT refunds for constructing a new charity building. It provides information on when a charity can claim a VAT refund using the DIY housebuilders scheme if it is constructing a new charity building for a charitable or relevant residential purpose.
Meanings
Relevant charitable purpose
A relevant charitable purpose building is used by a charity for non-business purposes.
For VAT purposes, activities that do not make a profit, or activities where any profit is only used to further the aims and objectives of the charity, can still be classed as business activities.
Relevant residential purpose
A relevant residential purpose building is used by a charity for non-business purposes. It is:
- a home or other institution providing residential accommodation for children
- a home or other institution providing residential accommodation with personal care for old age people, disablement, past or present dependence on alcohol or drugs or past or present mental disorder
- a hospice (as long as that hospice provides some residential accommodation, such as beds for patients)
- residential accommodation for students or school pupils
- residential accommodation for members of any of the armed forces
- a monastery, nunnery or similar establishment
- an institution which is the sole or main residence of at least 90 per cent of its residents