VAT Exemption

HMRC rules re VAT on goods for disabled and older people and charities

We are often asked whether we can supply items to charities or for use by registered disabled people without charging VAT. We have taken advice from the HMRC specialist unit that deals with this (on 0845 302 0203) and even though like you we feel this is unfair and would prefer it not to be, the short answer is generally NO.

HMRC says (see Section 2.1) that supplies of goods and services are only zero rated when ALL of the following conditions are met:

    the customer is eligible to purchase supplies at the zero rate

    the goods are for the personal or domestic use of the customer

    the goods and services are eligible to be supplied at the zero rate

Some of our products are specifically designed for use by disabled people and therefore you may qualify for exemption for these. Each of these products is labelled"VAT Relief Available" and when you purchase them you will be able to opt for VAT relief if you are eligible to do so and complete the necessary declaration.

The specific HMRC guidance is given in note 701/7 dated December 2014. This can be found either by typing 701/7 into the search function on the HMRC website or clicking one of the links below.

Notice 701/7 (updated December 2014) VAT reliefs for disabled and older people

Basically the product in question has to be "designed solely" for use by a disabled person. It is the designer, manufacturer or importer who decides this, and must retain evidence to support this, as explained at 4.5.3 of Notice 701/7. So the fact that a customer is registered disabled or is a school, charity etc is not sufficient to allow us to supply without charging VAT. An example used by HMRC is a walking stick - whereas a wheelchair is clearly "designed solely" for use by a disabled person a walking stick could be used by anyone, disabled or not.

The other question we are frequently asked is whether we can supply to a charity or to someone who is disabled for personal use who signs a certificate. The answer is NO unless the goods themselves are eligible (note the use of the word ALL in 2.1 of Notice 701/7), so if the goods are not eligible then VAT must be charged.