Readers’ forum: VAT registration

VAT registration

I act for a new community interest company (CIC) which will be fully funded by a wealthy benefactor. The company’s sole activity will be to promote mental and physical health in young people through boxing lessons and training routines. The CIC will employ two staff on its payroll and also pay a local gym to hire its facilities. There will be catering expenses as well to encourage good nutritional habits.

We would like to avoid registering the CIC for VAT but the benefactor has asked us to raise a quarterly invoice to his company for all the costs we incur up to annual limit of £100 000. As this amount is over the VAT threshold of £85 000 must we charge VAT?

Alternatively should we register for VAT anyway and charge him £100 000 plus VAT on the basis that...