Charities - VAT and the fundraising exemption

Yorkshire Agricultural Society v HMRC

The First-Tier VAT tribunal has sided with the taxpayer in the case of Yorkshire Agricultural Society regarding whether admission to their annual Great Yorkshire Show (‘the show’) fell under the VAT fundraising exemption. The Society was founded in 1837 to host agricultural shows. They had been charging VAT on the show’s entrance fees which they believed was incorrect and that the tickets should be exempt as a fund raising event. The Society made a voluntary disclosure to HMRC in April 2020 of overdeclared output VAT since 2016 which resulted in a claim of over £200,000.

HMRC rejected the voluntary disclosure in December 2021 and the Society appealed to the VAT Tribunal. The fundraising exemption is available for events organised by charities and other qualifying bodies with the VAT legislation stating that the exemption is available for:

The supply of goods and services by a charity in connection with an event:

(a) that is organised for charitable purposes by a charity or jointly by more than one charity,
(b) whose primary purpose is the raising of money, and
(c) that is promoted as being primarily for the raising of money.

Schedule 9, Group 12, Item 1 of VATA 1994

The Tribunal agreed with the Society that the event was organised for a charitable purpose by a charity and that the show’s main purpose was to raise funds. The Tribunal said that item (c) is met as the show was promoted for fundraising purposes and ruled that the word ‘primarily’ is incorrectly transposed from EU law and needs to be removed.

The Tribunal believed that the UK law was too restrictive and must be read in accordance with the EU Directive. It was not necessary to show that fundraising was the primary purpose of the event. This judgement has widened the scope of the fundraising exemption and may present an opportunity for charities to make refund claims for output VAT wrongly charged.

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