Question

If a Parish Council receives a grant for the purchase of a defibrillator, can they claim vat back on the purchase

Answer 1

Generally yes.  For VAT to be reclaimed on anything, the funding must come from the council but funds received in the form of a grant, applied for by the council for that purpose, would qualify as "council funds".  VAT is a very complex area so if in doubt, always check with a VAT expert.

Answer 2

Sorry to slide in on this one but it is VAT and grant related.

If a parishioner wanted to instal a bench on council land but didn't want to pay the VAT, is it appropriate for the PC to purchase the bench then take a donation from the parishioner equal to the cost of the bench excluding VAT so that the PC could reclaim the VAT and the parishioner wouldn't have to pay VAT?

I kind of know where I stand with it, just interested in others thoughts....

It has already been discussed in open forum and publicly suggested as a possible means of avoiding VAT.

Comments

That just sounds like Vat fraud. In the public open session we have been asked similar things but as the officer I close them down . How would you report on your governance on the AGAR box 3 if your Council did follow through on the proposal ?

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HMRC take a bit of a dim view of parish councils purchasing things with money from the recipient with a view to avoiding paying VAT.  Considered tax avoidance and a fraud.

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I’m inclined to think such a scheme legitimate. Provided the donor is not receiving a benefit from the expenditure (or at least no more benefit than any other citizen) I would think VAT reclaim is OK. A similar question was asked and answered positively here https://www.taxationweb.co.uk/forum/viewtopic.php?t=45281

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HMRC view has moved on considerably since 2014 and a purchase through a parish council solely for the purpose of avoiding VAT is considered fraudulent.  However, often the devil is in the detail of course.  If your minutes reflect the purchase is solely to avoid the parishioner paying the VAT element, it's fraud.  If the records reflect the purchase of a bench for the benefit of the public and, separately, a donation received (which the council is empowered to receive), then I'd suggest it would be difficult to suggest VAT avoidance.

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You can reclaim VAT on memorial benches

 https://www.gov.uk/hmrc-internal-manuals/vat-government-and-public-bodies/vatgpb8780