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HMRC internal manual

VAT Charities

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Fund-raising: Exempt charity fund-raising events

Law

VAT exemption applies to some fund-raising events by charities and other qualifying bodies (see below). The law relating to this is in Group 12 to Schedule 9 of VAT Act 1994.

The exemption covers supplies made by the charity running the fund-raising event. It does not exempt supplies made to that charity by organisations or other charities. This means that the charity running the exempt fund-raising event will invariably incur non-recoverable input tax.

Comprehensive guidance on fund-raising events can be found in Fund-raising events: Exemption for charities and other qualifying bodies.

What is a qualifying body?

Certain qualifying bodies may also take advantage of the exemption for fund-raising events. A qualifying body is:

  • Any non-profit making organisation that is a membership organisation within Group 9 to Schedule 9 of VAT Act 1994.
  • Any body that is an eligible body for the purposes of Group 10 to Schedule 9 of VAT Act 1994 and whose principal purpose is the provision of facilities for persons to take part in sports or physical education.
  • Any body that is an eligible body under the cultural exemption provisions in Item 2 to Group 13 of Schedule 9 of VAT Act 1994.

Therefore, whether or not they are a charity, if an organisation falls under any of the above exemptions they may organise an exempt fund-raising event under the provisions of Group 12 to Schedule 9, providing all the conditions are met.

What constitutes a fund-raising event?

There are two main criteria that must be met:

  1. The event must be organised by a charity (or qualifying body). Sometimes this will be obvious from the advertising literature, but at other times you may need to consider this carefully. The main question to ask is “who has financial responsibility?” For example, an event requires at least 500 tickets to be sold in order to break even. Who is responsible for covering any losses made if less than 500 tickets are sold? We would expect the responsibility to lie with the charity (or qualifying body) organising the event.

Some events, such as a film premiere or gala, may be advertised as raising funds for charity. You will need to check carefully whether it is a charity organising the event, as it is more likely that the event is organised by a corporate body which is donating the proceeds of the event to a charity.

  1. The primary purpose of the event must be to raise money. The main and overriding purpose of holding the event should be to raise funds and people attending should be aware of that. This means that the advertising literature, tickets, programmes etc make this clear. On occasion you may need to look at background papers, such as minutes of meetings, to confirm that the main reason for holding the event was to raise funds.

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Internet fund-raising

Fund-raising events held over the Internet that meet the other conditions of the fund-raising exemption can be treated as exempt from VAT. A charity’s entire website is treated as a location.

Fund-raising over the internet often takes the form of an auction. These usually take place over a number of days and may include a variety of items (or lots) for sale. This can be a single event if:

  • • there is a specified closing date
  • • bidding closes at this date
  • • goods are not sold before the closing date. When these conditions are not met, the sale of each item (or lot) would be a separate event.

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    Fund-raising events held in association with other events

    Sometimes a charity may be able to organise an exempt fund-raising event in association with a different event (which may or may not be an exempt fund-raising event in its own right). An example might be a national sporting event where the charity plans to have a marquee and hold an auction of sporting memorabilia. The charity can use the fund-raising exemption as long as the event it is organising meets all the other conditions of the fund-raising exemption.