One aspect of the Towards Zero Foundation’s (TZF, UK registered charity) work is aimed at reducing road fatalities. This includes subjecting vehicles to crash tests to check if they meet the required safety standards and publish the results on social media. To avoid negative publicity, car manufacturers take measures to improve the safety of the cars and pay TZF to re-test the cars to pass the safety tests. HMRC accepted that the “re-testing” element was a business activity for TZF and allowed VAT recovery on costs related to re-testing. However, HMRC denied input VAT recovery on the initial tests, on the basis that this was a non-business activity carried out by TZF to meet its charitable objectives.
Source DLA Piper
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