No direct link

The taxpayer charity offered a Pet Aid scheme by which people on low incomes could pay a small registration fee to receive free veterinary treatment for their animals.

In addition the charity received a substantial amount of donations which together with the registration fee income covered the gratis vet fees.

The charity claimed VAT on the fees charged by vet practices under the Pet Aid scheme.

HMRC refused the claim on the basis the scheme was not an economic activity the vet services were supplied to the pet owners rather than the charity which was not making exempt supplies of insurance services.

The First-tier Tribunal found there was no direct link between the registration fee paid by the pet owners and the vet services supplied.

The money was paid regardless of whether the animal received treatment. It was effectively a contribution to cover the charity’s administration...