Following a recent tribunal decision in Gablesfarm Dogs and Cats Home (20519), HMRC have issued a brief explaining the VAT liability of the sale by a charity of abandoned animals.
Gablesfarm Dogs and Cats Home is a charity that rescues lost, unwanted and homeless cats and dogs, many of which are subsequently sold to new owners.
It receives unwanted cats and dogs from owners as well as strays and abandoned animals given by local authority dog wardens, the police, and members of the public.
The tribunal found that the charity took steps to return genuinely lost animals to their owners and those it offered for re-homing had been deliberately abandoned.
In these circumstances the animals given to the charity by the local authority, the police and members of the public were donated and therefore zero rated when sold.
HMRC are not appealing the decision and accept that charities selling animals in similar circumstances should zero rate their supplies.
Charities that have accounted for and paid VAT on sales of animals that are now considered to be zero rated, may submit claims for overpaid tax to their local business advice centre.
