The Value Added Tax (Charities and Aids for the Handicapped) Order 2000

Explanatory Note

(This note is not part of the Order)

This Order, which comes into force on 1st April 2000, amends Groups 12 and 15 of Schedule 8 to the Value Added Tax Act 1994 (c. 23) (“the Act”).

Article 3 substitutes item 11 of Group 12 of Schedule 8 of the Act. Item 11 replaces the former item 11 so zero-rating applies to the supply to a charity of services of providing, extending or adapting bathrooms, washrooms and lavatories in residential accommodation or day-centres where this work is done to suit the conditions of handicapped people.

Article 4 of the Order inserts Notes (5J) and (5K) into Group 12. Note (5J) defines “residential accommodation” while Note (5K) defines a “washroom” for the purposes of Group 12.

Article 6 replaces item 1 of Group 15 of the Schedule, zero-rating sale or hire of donated goods by a charity when the goods have been donated either for sale, hire or any combination of these two and export.

Article 6 also inserts a new item 1A of Group 15 of the Schedule to zero-rate the same supplies as in the new item 1 when they are made by a taxable person who is a “profits-to-charity” person.

Article 6 also replaces item 2 of Group 15 of the Schedule, zero-rating a donation to a charity or a “profits-to-charity” person of any goods for sale, hire or export.

Article 7 replaces item 8 of Group 15 of the Schedule with items 8, 8A, 8B and 8C.

Items 8 and 8A remove the restriction both on the media in which a qualifying advertisement may be placed and on the “purpose” of a relieved advertisement and instead give zero-rating to all supplies to charities of making known their advertisement to the public, whether through publication, TV advertising slot or any other means.

Items 8B and 8C give zero-rating to design and production services, as well as closely related supplies of goods, of an advertisement whose promulgation was relieved through items 8 or 8A.

Article 8 replaces Note (1) to Group 15 of the Schedule to the effect that zero-rating only applies to sale or hire of donated goods by a charity or a “profits-to-charity” person, if the supply takes place as a result of the goods having been made available to one or more “specified persons” or to the general public, and the parties made no arrangements of any kind relating to the donated goods before the supply took place.

Article 8 also inserts new Notes (1A) to (1F) to Group 15 of the Schedule.

Note (1A) stipulates that goods are donated for hire only if they are hired continually and then sold, exported or thrown away when no longer hired.

Note (1B) stipulates that items 1 and 1A do not include sale or hire of goods that have been used by the charity or “profits-to-charity” person in any way other than hire or being available for sale, hire or export.

Note (1C) defines “specified persons” in Note (1) as people who are either handicapped, in receipt of one or more means-tested benefits or both. (“Handicapped” is already defined in Note (5) as “chronically sick or disabled”.)

Note (1D) lists the means-tested benefits currently available in the UK.

Note (1E) defines a “profits-to-charity” person for the purposes of items 1A and 2 as a person who is obliged by a written agreement or by another reason to transfer to charity the profits of their sales or hiring of donated goods.

Note (1F) excludes land (and other things deemed to be goods for the purposes of the VAT law) from zero-rating under items 1, 1A and 2.

Article 9 inserts new Notes (10A) to (10C), into Group 15, setting out supplies which do not qualify for relief under item 8, 8A, 8B or 8C.

Note (10A) excludes from items 8 and 8A supplies used to contact selected individuals or groups.

Note (10B) excludes from items 8, 8A, 8B and 8C supplies relating to a charity’s own website.

Note (10C) excludes from items 8B and 8C supplies to a charity, used by the charity itself to design or produce an advertisement.