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HMRC internal manual

Business Income Manual

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HM Revenue & Customs
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Meaning of trade: mutual trading and members clubs: mutual associations: specific activities: voluntary organisations and charities: conditions for exemption

S529 Income Tax Act 2007, S483 Corporation Tax Act 2010

The sale of donated goods at auctions, jumble sales or other venue is not regarded as trading. No liability to tax therefore arises on the profits from these sales.

Where the organisers charge an entrance fee to people wishing to sell their own goods at events such as jumble sales and car boot sales, these events fall within the exemption if both of the conditions in BIM24794 are satisfied.

The exemption applies to all the profits of the event - and extends not only to the admission charges but also ancillary sources of income from the event such as:

  • sale of refreshments
  • sale of raffle tickets
  • sale of programmes
  • sale of advertising space.

Each ancillary source of income must properly form part of the event and must not constitute a separate profit-making activity. If a programme or brochure is primarily a vehicle for advertisements rather than a way of informing people about the event, you should treat it as a separate profit-making activity.

Condition (a)

HMRC will decide whether condition (a) at BIM24794 applies in individual cases. The online detailed guidance note Fund raising events: Exemption for charities and other qualifying bodies on the HMRC website sets out the general conditions for VAT exemption for fund-raising events.

If necessary, the charity or voluntary organisation should be asked to provide confirmation from HMRC that the event is exempt from VAT under Group 12 of Sch 19 Value Added Tax Act 1994.

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Condition (b)

You should consider condition (b) at BIM24794 to be satisfied where the profits are donated to well known national and local charities, schools, hospitals and old people’s homes, or to individuals to relieve poverty or hardship. You should exercise your discretion in deciding whether other donations fall within the condition.