VAT Relief - all you need to know
Who can claim VAT Exemption Relief on purchases?
If you are chronically sick or disabled and the products are for your personal use. "Chronic" meaning lasting a long time.
Where the goods are made available by the charity to a disabled person for their personal or domestic use.
Full details can be found at the HM Revenue and Customs website under "VAT relief for disabled people; HMRC Reference: Notice 701/7 (August 2002".
Important note: not all products are eligible for VAT exemption relief.
IF YOU ARE ELIGIBLE FOR VAT EXEMPTION RELIEF
- You can buy certain products in our store without having to pay VAT
- Have any of these products serviced or repaired without paying VAT
IF YOU ARE NOT ELIGIBLE FOR VAT EXEMPTION RELIEF
- We are obliged to charge you the full rate of VAT on the whole of your order
VAT Exemption Declaration Form
The government requires that you complete a VAT Exemption declaration form. If you are in any doubt as to whether you are eligible to receive goods or services zero-rated for VAT you should consult us.
You can download the Excemption Form using the following links. Please choose either the customer form if you are a private individual or the charity form if you are a registered charity:
1.0 VAT Exemption Customer Eligibility
1.1 Who can purchase VAT-Exempt goods and services?
EXTRACTS from HMRC Reference: Notice 701/7 (August 2002)
The VAT-exemption of goods and services for disabled people depends in part upon the status of the recipient. VAT exemption applies to the following persons:
- Handicapped people
- Charities and
- Certain eligible bodies
And satisfy one of the following equipment condition:
- You can zero rate the supply to an eligible customer as detailed in paragraph 3.1 of Notice 701/7 of any other equipment and appliances that have been designed solely for use by disabled people. It is not sufficient for zero-rating that the equipment or appliance is merely destined or intended for use by a disabled person, or is mainly purchased by disabled persons. For example, general purpose equipment such as most computer hardware, ordinary or orthopaedic beds, orthopaedic or reclining chairs may benefit a disabled person, but are designed for general use or for use by disabled and able bodied people alike. Such products are not eligible for relief.
- You can zero rate parts and accessories which you supply to an eligible customer as defined in paragraph 3.1 of Notice 701/7 provided that they were designed solely for use in or with goods which themselves qualify for VAT relief as described elsewhere in this section. Parts means integral components without which the equipment is incomplete. Accessories means optional extras which can be used to improve the operation of the equipment, or enable it to be used, or to be used to better effect, in particular circumstances. VAT relief does not apply to general use items such as standard batteries, even if these were purchased to be used within an item which is eligible for VAT relief. If the batteries were solely designed to operate within the eligible item however, they would be eligible for relief.
- You may zero rate the supply to an eligible person of your services of repairing or maintaining any of the goods specified above.
1.2 Supplies to handicapped people
You would not have to pay the VAT if you or the person you are buying the good for is "chronically sick (have a long-term illness) or disabled" - see sub-paragraph 1.2.1, and the goods and services are purchased or acquired for their personal or domestic use - see paragraph 1.5.
1.2.1 What does "chronically sick or disabled" mean?
A person is "chronically sick or disabled" if he/she is a person:
- with a physical or mental impairment which has a long-term and substantial adverse effect upon his/her ability to carry out everyday activities;
- with a condition which the medical profession treats as a chronic sickness, such as diabetes; or
- who is terminally ill
It does not include a frail elderly person who is otherwise able-bodied or any person who is only temporarily disabled or incapacitated, such as with a broken limb. If a parent, spouse or guardian acts on behalf of a "chronically sick or disabled" person, your supply is treated as being made to that "chronically sick or disabled" person.
The term "disabled" is used throughout this notice and means "handicapped" or "disabled or chronically sick".
1.3 Supplies to charities
You cannot zero rate all goods and services to all charities. You should, therefore, take extra care in checking that a charity is eligible for VAT relief before applying.
Supplies of goods to charities will qualify for VAT relief where the goods are made available by the charity to a disabled person for their personal or domestic use - see paragraph 1.5.
There are certain other circumstances when supplies of goods listed at paragraph 1.4 will qualify for VAT relief - see Notice 701/1 Charities and Notice 701/6 Charity funded equipment for medical, veterinary etc uses.
1.3.1 What is a charity?
Bodies in England and Wales have charitable status when they are registered, excepted or exempted from registration with the Charity Commission, or bodies anywhere in the United Kingdom which are treated by the Inland Revenue as charitable. Not all non-profit making organisations are charities.
There is no distinction for VAT purposes between those charities registered with the Charity Commission and those that are not required to register. However, unregistered charities claiming zero-rating may need to demonstrate that they have 'charitable status'. This may be achieved from their written constitution or by the recognition of their charitable status by the Inland Revenue. Further information on VAT relief's available for charities is contained in Notice 701/1 Charities.
1.4 Supplies to eligible bodies
Supplies purchased by certain healthcare bodies and hospitals with charitable funds may qualify to be zero-rated under separate rules. For more information see VAT Notice 701/6 Charity funded equipment for medical, veterinary etc uses.
1.5 What does for "domestic or personal" use mean?
"Domestic or personal" use means that the supply must be made available specifically for the use of an eligible individual (or series of eligible individuals).
Excluded from the terms "personal" or "domestic", and not eligible for VAT relief are:
- goods and services used for business purposes;
- supplies made widely available for a whole group of people to use as they wish. For example, a stair lift in a charity building for the use or convenience of all chronically sick or disabled persons who might use the building would not qualify for relief. This is because the charity is making the lift available for the general use of all those people who might require it, rather than for the personal use of specified individuals;
- goods and services supplied to:
- an in patient or resident of a hospital or nursing home;
- any person attending the premises of a hospital or nursing home for care or treatment; and
- any other person or commercial establishment where the goods are for use by, or in connection with, either of the above,
- where the items are intended for use in the care or treatment provided in the hospital or nursing home. For more information see Notice 701/31 Health and Care institutions.
1.6 Can anyone pay for the eligible goods and services?
As a general rule, yes.
There are, however, special rules that apply to supplies of certain types of equipment paid for or arranged at the behest of the National Health Service, hospitals or certain other institutions that provide nursing or residential care. For further information on these rules please see Notice 701/31 Health and Care institutions.
1.7 What if a customer is unable to make a written declaration?
It may not always be possible for a disabled person to sign a declaration (for example, if the person is a child or unable to write). In such cases, the signature of a parent, guardian, doctor or another responsible person is acceptable on the declaration.
If you are unsure if you would qualify for VAT exemption or need assistance completing the exemption form, please contact us and we will be happy to assist.