The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marked the end of the Brexit transition / implementation period entered into following the UK’s withdrawal from the EU. At this point in time, key transitional arrangements came to an end and significant changes began to take effect across the UK’s VAT and customs regime. This document contains guidance on subjects potentially impacted by these changes. Before continuing your research, see the Brexit — overview guidance note.
This guidance note provides an overview of the VAT treatment of fundraising events and, in particular, the exemption for fundraising events that applies to certain charities and ‘qualifying bodies’. This note should be read in conjunction with the Charities ― overview and Charities ― recovering VAT and VAT reliefs guidance notes.
Key HMRC guidance on fundraising can be found in Notice VCHAR9000 and Notice 701/1. Further fundraising guidance is also available on the GOV.UK website.
The VAT legislation limits the exemption for fundraising events to supplies made by charities and ‘qualifying bodies’.
For the meaning of charity in the context of this exemption, see the Charities ― overview guidance note.
For the purposes of the fundraising exemption, relief also extends to a charity’s trading subsidiary provided:
it is wholly owned by the charity
it has either agreed in writing (whether or not contained in deed) to transfer its profits (from whatever source) to the charity or its profits (from whatever source) are otherwise payable to the charity
VATA 1994, Sch 9, Group 13, Note 2
Therefore, normally, if a charity’s trading subsidiary can retain its profits then it will not be able to exempt any fundraising activities that it holds. However, HMRC has stated that it will accept that exemption may apply, where:
the arrangements are compatible with charity law
profits are paid to the charity
the only profit retained annually by the subsidiary is not subject to corporation tax
the profit is retained
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