VAT Refunds for Non-VAT Registered Organisations

Most organisations that aren't registered for VAT cannot reclaim the VAT they pay on purchases. However, several special refund schemes exist for specific types of organisations carrying out non-business activities, including local authorities, academies, certain charities, and museums and galleries that offer free admission.

Who can claim VAT refunds

You can claim back VAT on non-business activities if your organisation is:

• A local authority or similar body
• An academy school or multi-academy trust (MAT)
• A palliative care, air ambulance, medical courier or search and rescue charity
• A non-departmental body or similar body not registered for VAT

Separately, museums and galleries offering free admission to the public may be eligible for refunds under a different scheme (section 33A of the VAT Act 1994). To qualify, your museum or gallery must be specifically listed in the VAT (Refund of Tax to Museums and Galleries) Order.

Time limits for making claims

You must submit your claim within 4 years after the end of the month in which you received the supply.

Your claim must:

• Cover a period of at least one calendar month and must end on the last day of a calendar month
• Cover at least 12 months if you want to claim less than £100

What you need to claim

Before you start your claim, you'll need:

• Your unique reference number starting with X followed by 2 capital letters and 12 numbers (for example, XTV126000123456). You'll find this on your bank statement if your organisation has claimed before
• Your registered organisation postcode
• The start and end dates for your VAT claim period

For your first claim, or if your address or bank details have changed, you'll need a bank statement dated within the last 3 months to confirm these details.

Information required for each invoice

You must provide the following details for every invoice:

• The invoice date
• The supplier's VAT registration number
• The VAT amount
• The name of the organisation receiving goods or services shown on the invoice
• A brief description of the goods or supplies

If you're claiming for 6 or more invoices, you'll need to upload a single spreadsheet or document containing this information for all invoices.

How to claim online

You must sign into the business tax account using the Government Gateway ID and password for your organisation. You cannot use your personal tax account.

The online service is the quickest way to submit your claim.

If you cannot claim online

If you're unable to use the online service, you can complete form VAT126 instead. You must:

• Gather all your information before starting, as you cannot save your progress while filling in the form
• Fill in the form online
• Print and post it to HMRC at the address shown on the form

Museums and galleries refund scheme

Museums and galleries that offer free admission to the public are not considered to be carrying out business activities in relation to this free access. Normally, this would mean they cannot recover any VAT.

However, if your museum or gallery is listed in the VAT (Refund of Tax to Museums and Galleries) Order 2001 (as amended), you can claim back VAT incurred on most goods and services purchased to grant free rights of admission to your collections. This scheme has been in place since 1 April 2001.

What counts as free admission for museums and galleries

Admission is free where the public can enter a museum or gallery without pre-booking, view the collections on display, and use freely available facilities for no charge. This includes access to common areas and facilities such as play areas for children, and lectures or instructional classes provided free of charge.

Eligibility criteria for museums and galleries

To be considered for inclusion in the scheme, museums or galleries must:

• Be open to the general public for at least 30 hours per week, without exception
• Offer free entry without prior appointment
• Hold collections in a purpose-built building
• Display details of free entry and opening hours on the museum website

Applications for new museums and galleries to join the scheme must be supported by one of the following:

• Department for Culture, Media and Sport
• Welsh Government
• Northern Ireland Assembly
• Scottish Government
• Ministry of Defence

Completing an application does not guarantee admission to the scheme, and the final decision rests with ministers.

What VAT can be reclaimed under the museums scheme

Museums and galleries on the scheme can reclaim VAT incurred on:

• The supply of goods or services
• Goods imported into the UK
• Goods acquired in Northern Ireland from the EU

These must be used or intended to be used for free admissions. Whether or not you're registered for VAT, you can only get refunds on goods and services if you place the order, receive the supply, receive a tax invoice addressed to you, and pay from your own funds.

The scheme covers three national libraries (British Library, National Library of Scotland, and National Library of Wales) but only for their permanent collections that qualify as museum collections, not for other facilities such as reading rooms.

Record keeping

You must keep invoices and other records to support your claims for 6 years, unless HMRC agrees in writing to a shorter period.

Sources

• Claim a VAT refund as an organisation not registered for VAT
• VAT Refund Scheme for museums and galleries (VAT Notice 998)

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.