I suspect that many fundraising charities will have already heard of the VAT dispute in relation to the Yorkshire Agricultural Society (“the Society”).
The Society historically treated the admission charges to the Great Yorkshire Show (“GYS”) as standard rated. However, the Society formed the view that these admission charges were exempt under the fundraising exemption as all of the conditions set out in VATA94, Sch 9, Grp 12, Item 1 were being met. As such, the Society applied the exemption from 2017 onwards. A claim was also submitted in relation to the 2016 show on the basis that VAT had been charged in error.
HMRC disagreed with the Society’s view, rejected the 2016 claim, and raised assessments for admissions from 2017 onwards.
For the fundraising exemption to apply, the following conditions must be met:
- a) the event is organised for charitable purposes;
- b) the primary purpose of the event is the raising of money; and
- c) it is promoted as being primarily to raise money.
In 2023 the First Tier Tribunal (“FTT”) found in favour of the Society and believed that all three points had been met.
HMRC appealed the decision of the FTT, not in relation to 2017 onwards, but in relation to 2016. HMRC did not dispute that condition a) has been met, but the application of conditions b) and c) was challenged.
HMRC argued, in relation to condition b), that a sole primary purpose had to be identified. So, the Society would have had to list all the purposes of the show and then rank them in order to identify the primary purpose.
The Upper Tribunal (“UP”) disagreed with HMRC and said there could be more than one primary purpose. The show had two interdependent primary purposes: fundraising and education.
In relation to condition c) HMRC argued this condition was failed because it was not promoted primarily for the raising of money, and therefore, the exemption could not apply. The UT disagreed with this on the basis that condition c) had no basis in EU law, and as the dispute was in relation to a period prior to Brexit, UK law must conform with the EU VAT Directive.
The UT, therefore, found in favour of the Society.
What this means for charities
This case highlights that there doesn’t have to be just one primary purpose for the fundraising exemption to apply. However, post-Brexit, a charity must ensure that fundraising event marketing clearly indicates that the primary purpose is the raising of funds.
If you’re a charity trustee or financial manager needing to check the VAT requirements of a particular event and need support, contact us at BHP to discuss.
