The Institute of Chartered Accountants of Scotland (ICAS) has published their thoughts. 

Scotland’s membership organisation and business network for chartered accountants has unveiled its support for extending VAT relief for business donations of goods to charity. 

The Institute of Chartered Accountants of Scotland (ICAS) said in a response to an HMRC and HM Treasury consultation on the subject that vital administrative requirements for donor businesses and charities are kept to a minimum. 

Currently, VAT relief is available on goods donated to a charity for sale (for example, through a charity shop) but not for goods given for onward donation, or for use in the delivery of the charity’s services. 

The relief is currently restricted in this way due to concerns about the scope for fraud and abuse.

The charity didn’t support basing the proposed relief on lists of goods which would be eligible or excluded, claiming this would make it more difficult and burdensome to administer and apply.

Likewise, ICAS opposed restricting relief to goods for distribution to those in need but not for use in the delivery of a charity’s services.

Susan Cattell, head of tax technical policy at ICAS, said: “The right balance must be found between limiting the scope for abuse and having a relief that is workable for charities and businesses. 

“It would make sense to restrict the relief to registered charities, with a certification system, if this means that the relief could be simpler to operate because there would be fewer concerns about potential abuse. 

“Additionally, we saw some merit in combining this approach with value limits (for goods donated), rather than adopting other more administratively complex options suggested in the consultation which are unlikely to work in practice.”