VAT and Carbon and Charities

One of the problems besetting charities these days is the amount of legislation and other paperwork that is involved.

VAT is a major problem for many charities, since they cannot claim much of it back, even if they are registered.

And then there is trading. When the World Land Trust set up its carbon balanced programme, it was probably the first charity to offer any form of traceable carbon offsets. Now of course any number are jumping on the bandwagon. However, as we have found out it is not quite as simple as it appears at first, and other charities will no doubt find out in due course. If there is a service provided, then the income is subject to VAT. And a service is very widely defined. For instance, when a company puts a charity's logo on its website, saying it has carbon balanced with the World Land Trust, that is deemed a benefit to the company, and therefore subject to VAT. And of course this is a potential accounting nightmare.

I mention this, because some companies carbon balancing with the World Land Trust have wondered why, since we are a charity, we are charging them VAT. Unfortunately, the advice we have is that we have to. Not all charities seem to be aware of this, but we are always very cautious, since tax can be claimed retrospectively.