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taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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VAT - Part 1 - we are a VAT registered business that is thinking

Resolved Question:

VAT - Part 1 - we are a VAT registered business that is thinking of supplying a (zero rated) Food product but with a promise to pay a fixed amount, say £0.10 to a national charity. The product will be sold in UK retail stores, we will invoice the stores direct and pay £0.10 direct to the charity on each unit sale. Is the donation element standard rated for VAT even though the item (food) is zero rated?
Submitted: 3 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 3 years ago.
Hello and welcome to the site. Thank you for your question.

Donations to charity freely given by a business where the giver does not receive anything in return are outside the scope of VAT..... No VAT.

Confirmation of this can be found under. Goods and services outside the scope of VAT here

http://www.hmrc.gov.uk/vat/forms-rates/rates/rates.htm


I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 3 years ago.

Hi,

Thank you for that, however how does the freely given bit work?

The scenario is that they are buyng a product, say pack of sausages that cost £1.00 (zero rated supply) from Asda. We are the supplier of the sausages, i.e. we sell them to Asda. For every pack of sausgaes we sell to Asda we give £0.10 to say, Help the Heroes.

Can you confirm we dont have to account for VAT on the £0.10 donation to Save the Heroes?

Expert:  taxadvisor.uk replied 3 years ago.
Bob, thank you for your reply.

The charity in question is Save the Heros. Provided you are not getting anything in return from the named Charity, then you don't have to account for VAT on that contribution.

I hope this is helpful.
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