TOLLEY_ICON4_SIGNIN Contact us
Home/ Tolley Tax Guidance/ Value Added Tax / Types of supply
Value Added Tax

Supply and consideration ― donations and sponsorship

Produced by Tolley
  • 03 May 2022 11:22

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Supply and consideration ― donations and sponsorship
  • Is a donation consideration for a supply?
  • Admission for a donation
  • Voluntary subscriptions
  • Gratuities and tips
  • Donations in connection with betting and gaming
  • Project funding
  • Will aid
  • Is sponsorship consideration for a supply?
  • Significant and insignificant benefits of sponsorship
    • More...

Supply and consideration ― donations and sponsorship

This guidance note looks at donations and sponsorship for VAT purposes. In particular, it considers when a payment will be consideration for a supply and therefore potentially within the scope of VAT.

For an overview of supply and consideration generally, see the Supply and consideration ― overview guidance note.

For detailed commentary on the legislation and case law, see De Voil Indirect Tax Service V3.104.

Is a donation consideration for a supply?

If a monetary donation is freely given and the donor does not expect to receive anything in exchange, it will not be viewed as consideration for any supply. The payment is outside the scope of VAT and therefore no VAT needs to be accounted for by the person receiving the donation.

HMRC has suggested the following questions will be relevant when seeking to establish whether a donation is unconditional / freely given:

QuestionSignificance
Does the donor receive anything in return for the payment?If the donor receives something in return this suggests the donation may in fact be consideration for a supply
Are there any conditions attached to the payment that go beyond merely having to mention it in account statements?If there are conditions that go beyond mentioning the donation in the accounts the recipient may be supplying something in return and the donation may be consideration for a supply
What will the payments be used for?The use to which the payments are put may shed light on whether the donation is in

Access this article and thousands of others like it
free for 7 days with a trial of TolleyGuidance.

TAKE A FREE TRIAL

There's no margin for error. Think Tax.
Think Tolley.

TolleyGuidance gives you direct access to critical, comprehensive and up-to-date tax information and expertise you can rely on.

TAKE A FREE TRIAL

Popular Articles

Employment Tax

Notices of coding

Notices of coding are the means by which HMRC notifies both the employee and the employer of the tax code to be applied to the employee’s earnings. There are several types of coding notice, as detailed below. Only one of these types of notice, form P2, is sent to the employee, the others are sent to

30 Mar 2022 08:51 | Produced by Tolley in association with Vince Ashall Read more Read more
Owner-Managed Businesses

Transactions in securities and the Phoenix TAAR on a company sale or winding-up

The transactions in securities (TiS) legislation is anti-avoidance legislation aimed at situations where close company shareholders have engineered a disposal of shares to obtain a beneficial capital gains tax (CGT) rate, ie avoid income tax, on specified transactions.The targeted anti-avoidance

21 Mar 2022 07:27 | Produced by Tolley Read more Read more
Owner-Managed Businesses

Property partnerships

OutlineFor income and capital gains tax purposes, partnerships are regarded as being tax transparent ― ie they are not taxed in their own right but instead taxation is applied to the partners.Accordingly, if the partners are individuals, then much the same considerations apply as for an individual

21 Mar 2022 07:31 | Produced by Tolley Read more Read more