Probably because the charity has limited or no income subject to VAT. Many charity activities are funded by grants and donations or are VAT-exempt which means that the income does not count towards the registration threshold and the VAT on related costs cannot be recovered. VAT-exempt activities include (but are not limited to):
- The provision of medical care by hospitals and medical centres
- Supplies of education by an eligible body
- Supplies of welfare services. These are services which are directly connected with the provision of care, treatment or instruction designed to promote the physical or mental welfare of elderly, sick, distressed or disabled persons
- The care or protection of young persons. For example, services provided by a children’s home, nursery, playgroup, after school club or fostering service
- The provision of spiritual welfare by a religious institution as part of a course of instruction or a retreat
- Admission charges to a museum, gallery, art exhibition, zoo or to a theatrical, musical or choreographic performance
- Many fundraising events
