Animal refuge charities may be able to recover hundreds of thousands of pounds from the government following a recent VAT tribunal ruling that the sale of donated cats and dogs is zero-rated.

The sale by a charity of donated goods is currently zero-rated for VAT. However, prior to this decision, animals were considered donations only if they were directly handed over by their owners. This meant that the sale of strays and other abandoned animals handed over by the Police, RSPCA, wardens and general members of the public resulted in a charge of VAT at the standard rate of 17.5%.

Gables Farm Dogs’ and Cats’ Home were successful in their argument at the tribunal that all animals given to the charity qualified as donated and therefore zero-rated when sold. HMRC have confirmed that they will not be appealing against the decision.

Charities that have accounted for and paid VAT on sales of animals which are now considered to be zero-rated should submit claims for overpaid output tax.

This decision, coupled with the recent Fleming case, means that there is scope for recovering overpaid output tax as far back as 1973.

If you feel you have a potential claim and would like further information, please contact Phil Evans, our VAT Specialist on 01226 213131

or: mailto:philip.evans@gibsonbooth.co.uk