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Background to VAT and definition of charity

The term 'charity' is used throughout the VAT legislation. Notably, whilst there is no blanket VAT exemption of relief for charities, a number of VAT reliefs are contingent on the supplier or the recipient of the supply being regarded as a charity for VAT purpose.

Following the CJEU's judgment in Persche¹ the UK was obliged to amend its definition of 'charity' for VAT purposes so as to open up charitable tax reliefs to eligible European organisations. Consequently, and with effect from 1 April 2012², a separate definition of 'charity' for VAT purposes is contained in FA 2010, Sch 6.

Legislation was introduced in Finance (No 2) Act 2023³ to amend the FA 2010, Sch 6 definition so as to restrict VAT (and other tax) reliefs to charities coming within the jurisdiction of the High Court in England, Wales or Northern Ireland, or the Court of Session