VATSC03386 - Identifying a supply: Supplies of goods for no consideration: Qualifying charitable donations: Intended use of donated goods
For a business to use the exception, the receiving charity must intend to use the donated goods for a non-business purpose, including onward donation. This condition is set out in VAT Act 1994, Schedule 4, paragraph 5A(1)(b).
If the charity intends to use the goods for a business purpose, for example by selling them in a shop, the exception does not apply.
If the receiving charity is unsure how the goods will be used, the exception will not apply.
The donor should confirm with the receiving charity how it intends to use the donated goods before deciding whether the donation is eligible for the exception.