Please see our previous alert on VAT ruling broadens the scope for fundraising event exemptions.
All charities and non profit bodies who could potentially apply the fundraising exemption for charged events.
In UK VAT law, fundraising events are only seen as VAT exempt if they have a primary purpose of fundraising and are clearly held out as such. In many instances these conditions are clearly met but, in this case the event had more than one purpose. HMRC has intimated that ‘primary purpose’ equates to ‘sole purpose’ and this argument seemed to succeed in a previous Upper Tier decision in Loughborough Students Union and others.
However, in this latest case which sets a legal precedent, it was determined that:
It seems HMRC are seeking to limit the effect of the court decision. In our view, we are unsure how several primary purposes cannot automatically be seen as having equal weighting. Also, we are not certain whether an event needs to be held out as a fundraiser at all (but the safe option is to do so). Furthermore, we cannot see how an annual event is not at least semi-regular in nature. Perhaps more litigation will ensue.
Review your events subject to VAT where fundraising is a key aim from the outset, but the events have other key aims. It may be possible to recover any VAT overpaid on this basis going back four years.
For further guidance, please contact Rob Warne or your usual Crowe contact.