Should Parish Council raised VAT invoice on charges which it is liable to pay vat on?

Question

We hire out a hall, the charge of this is liable for standard vat, by law should the hirer pay vat on this and have a vat receipt?

Answer 1

Complex question VAT but generally PC's do not have to be  registered for VAT ( only registered businesses can charge ) as they are not businesses. . If I remember correctly, leasing or letting of buildings or land are exempt from vat anyway. Some years ago PC's were given the right to claim back any VAT they were charged in purchases or services they used, thus reducing the costs of their services to the community. Essentially eliminating a tax (precept) on a tax ( VAT). I am sure a VAT expert will put me right.

Comments

Apparently, we are registered for vat and do have to pay the vat as some aspects of our dealings as they are classified as business. For these aspects, I was assuming that we have to follow the usual tax formalities of giving vat invoices ready to present to a vat inspector as
 required by law.

Answer 2

If you have business activities that fall within the scope of VAT, which could in certain circumstances include hall hire, you must charge VAT and issue a VAT invoice so that any VAT-registered hirer may reclaim the VAT.

This is quite unusual for a parish council and there may be a more appropriate management model for your hall, depending on the individual circumstances. Your local ACRE would be able to provide advice on this.

Comments

Thank you for the advice. What does ACRE stand for please as this sounds as though it could be another useful source?

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ACRE is the collective name of the Rural Community Councils and it stands for Action with Communities in Rural England. There are 38 local branches, one in every rural county. If a Google search doesn't find your local organisation (some have changed their names) the national website www.acre.org.uk will point you in the right direction.

Answer 3

You really need to get formal advice on this one.  With the greatest of respect to the responders, this is a minefield that could really screw over your council if you get it wrong.  As an example, my PC paid for the renovation of a sports pavilion and in order to reclaim the VAT on the renovation works, we declared this hall liable for tax.  We did this after instructing a VAT specialist to undertake the correct calculations on council business for the previous 5 years and the next 2 future years.  Now we have to charge VAT on the hiring of the hall and pitches which financially for the council was the right thing to do in order to get the £40k VAT on the works.  But as I said before, get professional VAT advice - it is worth paying for this.