SLA and Grant Funding – Hope in the Community


The Hope case resulted in many potential issues regarding the VAT treatment of grant funding, especially when obtained via contracts or through SLA’s. The basic VAT position is if there is no “supply for a consideration” i.e. if the body making a payment or issuing a grant is not the recipient of resulting services then it isn’t a supply for business purposes and as such is outside the scope of VAT. If however there is a deemed supply then the payments could be subject to VAT. This issue was further complicated by the Hope case in which issues were raised concerning deemed supplies to the funder.


HMRC, to date, have not provided any revised guidance, as such there is a high level of uncertainty in determining whether a grant, contract or SLA is chargeable with VAT.


HMRC have recently stated that they have been reviewing this area and are aiming to provide comprehensive guidance next year. In the mean time charities and not for profit organisations in receipt of funding should ensure that contracts and SLA’s which on face value appear to be outside the scope do allow for the addition of VAT in case HMRC’s guidance moves the goal posts.


For more information on this topic, please contact Carol Watters on 01772 821021.