Social events organised by Students Unions – VAT exempt fundraising?
The First Tier Tribunal has released its decision in the Loughborough Students Union case, which considered whether social events held by a students union could qualify as “fundraising events” for the purposes of VAT exemption under Group 12, Schedule 9, VATA. The Tribunal concluded that such events could not qualify for the exemption.
The Tribunal’s decision emphasised the fact that there needs to be something distinctive about an event that qualifies it as a “fundraiser”, rather than simply qualifying it yourself to take advantage of the VAT exemption.
The FTT case also went further by scrutinising whether the UK’s interpretation of charitable fundraisers (under Group 12, Schedule 9) was compliant with EU law. The UK’s interpretation requires that the “primary purpose” of the event is to raise funds and that it must be “promoted” as such. The EU VAT Directive, however, does not require these conditions and so the question of the UK’s EU compliance was raised. The FTT concluded that the test of “primary purpose” was consistent with the EU Directive but the need for “promoting” the event as a fundraiser was not.
This has cast some doubt as to whether one of the requirements can be done without the other in the UK and the decision produces uncertainty for charities looking to hold similar such events, especially those which (whether intentionally or unintentionally) push the UK VAT legislation interpretative boundaries.
If you would like to discuss the impact this case has or may have on you or your charity, please get in touch with a member of the Centurion VAT team on 01633 415390 or firstname.lastname@example.org.
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