Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

VAT Charities

From
HM Revenue & Customs
Updated
, see all updates

Medical and scientific equipment (“relevant goods”): Is the supply to an eligible body?

In this section you will find guidance to assist you in establishing that a supply has been made to an eligible body.

In reaching a decision in this area you will frequently need to consider the basic supply position. You should establish this before moving on to the considerations contained in this section. There are a number of parties who may be associated with a supply that is covered by Group 15 Items 4, 5, 6 or 7. These include:

  • a supplier
  • a charity
  • a donor
  • a donee
  • an eligible body.

Remember not all charities are eligible for these reliefs.

The entitlement to relief depends in part on the funding arrangements for the purchase. You will find guidance on this issue in VCHAR14950.

Examples of eligible and ineligible supplies

The entitlement to relief also depends on how the supply is structured:

  • supplier > charity > eligible body

In this situation the supplier supplies goods to a charity which will donate them to an eligible body. Assuming that the goods are paid for with charitable funds or voluntary contributions, the supply to the charity will be zero-rated.

  • Supplier > eligible body

In this situation the supplier supplies the eligible body direct. Providing the purchase is paid for with charitable funds or voluntary contributions the supply can be zero-rated.

The main advantage of the relief when it is in this form is that it does not discriminate against charities that wish to donate funds rather than actual equipment. It is accepted that where an eligible body is also a charity all its funds are charitable.

  • Supplier > charity > other donee

In this situation the supplier supplies goods to a charity which will donate them to a donee who does not qualify as an eligible body. The circumstances in which this might arise would be if a charity donated goods to a GP practice. As the GP practice does not qualify as an eligible body the conditions of the relief have not been met, and zero-rating is not possible.

  • Supplier > other donor > eligible body

In this situation the supplier supplies the goods to a person or organisation that does not qualify as an eligible body. In these circumstances you will need to carefully consider the source of the funding. (You will find further guidance on this in paragraphs 0 to 0). Only if the funding has come from a charity or other voluntary contributions can the supply be zero-rated under item 4.

  • Supplier > other donor or other donee

In this situation the supplier supplies the goods to a person or organisation that does not qualify as an eligible body and is not intending to donate the goods to one. In this case the supply to the donor would not be eligible for zero-rating.

  • Supplier > other party

In this situation where the supplier supplies another party, zero rating would not apply even if the supply was paid for out of charitable funds or voluntary contributions.

The following case illustrates the point that a supply may not meet the necessary criteria to qualify for relief.

A charity was set up in order to purchase medical equipment which it then loaned out to medical practices. The organisation was not entitled to relief on the equipment that it purchased even though the equipment was of a kind covered by Group 15. This was because the charity was not an eligible body in its own right.