Charities: VAT for fundraising events

Charities and certain qualifying bodies may benefit from a VAT exemption on goods and services supplied during fundraising events. This guide outlines the rules, key tribunal decisions, and information to help ensure compliance.

What Are Charities and Other Qualifying Bodies?

A body is considered a charity if it has charitable status. To qualify for charitable status, a charity must:

• Be based in the UK, Isle of Man, an EU member state, Iceland, Liechtenstein, or Norway
• Be established exclusively for charitable purposes
• Be registered, excepted, or exempt from registration with:
  • The Charity Commission for England and Wales
  • The Office of the Scottish Charity Regulator (OSCR)
  • Or invited to register by the Charity Commission for Northern Ireland
• Be run by ‘fit and proper persons’
• Be recognised by HMRC

Fundraising Events

Under UK VAT law, charities and qualifying bodies can exempt supplies made in connection with a fundraising event - provided specific conditions are met:

Conditions for Exemption

• The primary purpose of the event must be to raise funds for the charity’s activities.
• The event must be promoted as a fundraising event to the public.
• All supplies made at the event (such as admission, catering, entertainment, or merchandise) must form part of the fundraising effort and not be separately promoted or priced.
• The exemption is mandatory charities cannot opt to charge VAT instead.

What Doesn’t Qualify?

• Activities that are ongoing or commercial in nature—like operating a shop or bar.
• The exemption also does not apply if it could distort competition with commercial businesses.

Upper Tribunal Decision: Yorkshire Agricultural Society

The case of Yorkshire Agricultural Society v HMRC provided important clarification on two key aspects: primary purpose and event promotion – HMRC has not appealed this decision.

Primary Purpose

Previously, HMRC only allowed the exemption if fundraising was the sole primary purpose of the event. The Upper Tribunal ruled that:

• An event can have more than one primary purpose.
• If fundraising is one of the main purposes, and these purposes are interlinked and inseparable, the exemption still applies.

As a result, where an event has more than one primary purpose, HMRC requires objective evidence that:

• Fundraising was the clear primary purpose, or
• Fundraising was one of the primary purposes and that the purposes are so interlinked that they cannot be separated in importance

Acceptable evidence includes documents showing the event was organised as a fundraising event, not simply intended to generate income.

Promotion of the Event

VAT law requires that the event be promoted as primarily for fundraising. However, the Upper Tribunal concluded that the word “primarily” should be disregarded. The event must still be promoted as a fundraising event, but it need not be promoted as primarily for that purpose.

Limits on the Number of Events

There are limits on how many fundraising events can be exempt:

• A maximum of 15 events of the same kind can be held at the same location in any one financial year.
• If 16 or more such events are held, none will qualify for exemption—including the first 15.

What Counts as “Same Kind” and “Same Location”?

• Events are of the “same kind” if they are similar in nature (e.g. monthly concerts).
• “Same location” refers to the same physical place. However, identical events at different venues can still qualify for exemption separately if all the other conditions are met.

Can Charities ‘’opt’’ to Charge VAT?

No. The exemption is mandatory where all conditions are met. Charities cannot opt to charge VAT on qualifying fundraising events.

If an event does not meet the conditions, it must be treated as a taxable supply and VAT applied at the appropriate rate.