VAT: Churches renting property for their activities

When a landlord rents space to a tenant, the landlord can exercise an 'option to tax' the transaction at the standard rate of VAT. Whilst this may be useful for the landlord, where a church is the tenant it is unlikely that the church will be able to recover any of the VAT, in effect raising the cost of renting property by some 20%. This paper explains the problem from a church perspective and sets out a solution.

Topics included:

• The problem outlined;
• Some practical details and definitions;
• Recovering past VAT charges;
• Certification of relevant charitable purpose;
• An important exception