Readers' forum : Charitable dealings

Neil Warren’s feature on reclaiming input tax on overheads (‘On the right track’  Taxation 1 June 2017) made me think I have made errors on past VAT returns that I complete for a charity client.

The charity is sponsored by a large local company in Leeds and VAT is charged on the sponsorship income. This is not a problem because the sponsor can claim input tax. This fee is the only taxable income earned by the charity.

The sponsorship funding is then directly used to pay for the maintenance and upkeep of the charity’s website which gives information about the organisation’s activities and helps customers with medical conditions. The sponsor has an advert on the website as one of the benefits of his sponsor agreement.

My view has been that because the taxable sponsorship income is directly used to finance the website input tax can be...