The Government Budget 2018 introduced the Charities VAT Compensation Scheme. Under the scheme, schools as charities may be able to reclaim some element of their VAT costs based on the level of non-public funding they receive. The scheme applies to VAT paid on expenditure on or after 1 January 2018. VAT paid in years prior to that cannot be claimed.
Schools can submit one claim per year, which should relate to VAT paid in the previous year January to December.
Claims can only be submitted between 01 January and 30 June each year. It is not possible under any circumstances to submit a claim after the closing date has passed.
Charities VAT Compensation Scheme
For schools to qualify for the VAT Compensation Scheme they must provide the following:
- RCN Number from Charites Regulator
- CHY Number from Revenue
- School holds a current Tax Clearance Certificate
- Claims relate to one calendar year only and submitted no later then the 30th June the year following the calendar year to which the claim relates (i.e. first year 2018 for June 2019).
- Full set of audited accounts required for year in question. These accounts must be for the charity’s financial year and the year end of the financial year must be the year to which the claim relates or the year in which the claim is being made. So if school year runs from 1st September 2017 to 31st August 2018 and claim is 1st January 2018 to 31st December 2018 this will pose another problems for schools.
- VAT Invoice must be paid to the supplier
- To calculate qualifying income, a charity should deduct from its total income for the year to which the claim relates, all or any of the following, if applicable:
– educational fees received if the charity is a school, university, institute of
– technology or educational establishment,
– income from shops, restaurants and retail outlets,
– refunds or reliefs received under any other scheme or legislation administered by the Revenue Commissioners,
– funding, refunds, and reliefs received directly or indirectly from the state (i.e. DE)
- The amount which may be claimed under the scheme is referred to as “eligible tax” in the legislation and is the amount which a charity may claim under the scheme (i.e. the amount which is eligible to be claimed based on the level of non-public funding received).
- Claims not accepted under €500
- Note the total amount of claims in each year exceeds the capped amount of €5m any refunds due will be paid to charities on a pro rata basis. So after all that, the school may only get a portion of what they are entitled to get.