VAT Briefing: VAT made simple when working in partnership
Abstract
There is a common misconception that charities and other third sector organisations are exempt from VAT because they do not have to pay corporation tax on profits from their charitable activities.
If commercial businesses work together to deliver a contract for a third party,they are obliged to charge each other VAT on the services and goods they provide and sell to each other. Third sector organisations that are not registered charities must pay tax as commercial businesses do.
Although charities enjoy some specific exemptions from charging and paying
VAT, in general they must charge and pay VAT just like commercial businesses. So if two charities work together they too are caught by the same VAT rules as businesses.
This briefing explains the most important rules governing VAT on partnerships. It then explains how to make sure that your partnership operates within those rules.
Full paper http://www.financehub.org.uk/uploads/documents/VAT_Briefing_138.pdf
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