HMRC confirm wider interpretation of the VAT fundraising exemption

HMRC issued a Revenue & Customs Brief this week confirming the VAT Upper Tribunal decision in January in favour of the Yorkshire Agricultural Society, who ran a successful annual Great Yorkshire Show. All the income such as admission, catering and sale of merchandise from events that are marketed as fundraising by charities is VAT exempt. 

Previously HMRC considered that the event must have a single primary purpose, fundraising, but the Tribunal decided that it is possible for the event to have more than one primary purpose (education and fundraising in this example) and still qualify for the exemption. The negative impact of the fundraising exemption is that VAT on the direct costs of the event is exempt input tax and is irrecoverable subject to the partial exemption de-minimis limits.

If you wish to discuss this in further detail, please get in touch with one of our Indirect Tax Services team members here.