Crowe UK outlines five key VAT and tax risks and opportunities for hospice charities, covering corporation tax on non‑primary purpose trading, Gift Aid compliance, fundraising event exemptions, building project VAT relief, and upcoming investment rules effective April 2026. The article highlights practical compliance steps and recent court rulings that may affect hospice operations.
From April 2026, hospices must demonstrate each investment is held solely for the charity’s benefit to qualify as an approved charitable investment; otherwise, investment income may be taxable.
If a hospice’s building project costs exceed £250,000 plus VAT (expected to rise to £600,000), the building’s use must be monitored for ten years, and any change in use requires adjusting the initial VAT reclaim.
Income from fundraising events is usually exempt from VAT and direct tax, but the exemption depends on factors such as the nature of the event and sponsorship arrangements; the Yorkshire Agricultural Society case recently tested this exemption.
Hospices must ensure Gift Aid declarations are correctly worded, valid, retained, and that digital declarations have an audit trail; retail Gift Aid scheme charges to donors are subject to VAT but allow VAT recovery on shop costs.
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FE Week · 9 days ago
The Court of Appeal has ruled in favour of Colchester Institute in a VAT dispute with HMRC, allowing the college to reclaim VAT on pre‑2010 capital projects. The decision could extend to an estimated 20‑30 other colleges and raises uncertainty for charities that may lose VAT discounts. The ruling centres on the Lennartz mechanism, which HMRC had withdrawn in 2010.
Law360 · 15 days ago
A London court ruled that a technical college receiving free courses funded by the UK government must treat the funding as consideration for its taxable supply of services, making it subject to VAT that can be recovered from HMRC. The decision clarifies the tax treatment of government funding for educational services. The ruling was issued on March 27, 2026.
The VAT Team · 16 days ago
The article explains how place of supply rules determine VAT treatment for cross‑border services, outlining B2B and B2C rules, land‑related exceptions, and the importance of identifying place of supply to avoid compliance issues. It also highlights that UK VAT applies if the place of supply is the UK, and that non‑established businesses face a nil registration threshold.
GOV.UK · 17 days ago
The UK government’s Simplified Customs Declaration Process (SCDP) offers a two‑stage electronic declaration method that reduces border controls for authorised traders. Importers must be pre‑authorised, hold an EORI number, and submit a supplementary declaration within ten calendar days of the reporting period’s end, keeping records for four years.
BBC · 18 days ago
Trinity Christian School in Reading closed after 13 years, citing the removal of VAT exemption on private school fees and rising business rates as the main reasons. The UK government introduced VAT on private school fees from 1 January 2025 at the standard 20% rate, expected to raise £1.8 billion a year by 2029/30. The school’s business rates increased to £35,000 from about £5,000, and its application for discretionary relief was denied.
RossMartin · 18 days ago
HMRC’s Brief 9 confirms that supplies of locum doctors are exempt from VAT under Item 5, Group 7, Schedule 9 of the VAT Act 1994. The guidance also explains how businesses can claim refunds for over‑declared output tax on such supplies made within the last four years, and notes that HMRC is reviewing policy and will issue updated guidance in due course.
