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Key Upper Tribunal Ruling on VAT Exemption for Charitable Events
The Yorkshire Agricultural Society (YAS), a charity that organises and runs the annual Great Yorkshire Show in Harrogate, has won a significant legal battle against HMRC regarding VAT exemption on admission fees for its 2016 and 2017 events. This decision could have major implications for charities that charge VAT on event tickets
Background of the VAT Dispute
YAS had treated entry fees for the 2016 and 2017 Great Yorkshire Show as VAT-exempt under the charitable fundraising events exemption (Schedule 9, Group 12, Item 1 of VATA 1994). However, HMRC challenged this, arguing that the supplies did not qualify for the exemption with their main argument being that the primary purpose of fundraising condition set out in the legislation had not been met. HMRC held that there was a dual purpose to the events and therefore fundraising was not the primary purpose.
Tribunal Decisions Favouring YAS
In 2023 YAS appealed to the First Tier Tribunal (FTT) which agreed that there can be more than one purpose for the VAT exemption to apply. The fundraising was not a separate purpose, but was one of two equally important and interdependent purposes, the other being education, which formed a single, main purpose of the show, satisfying the requirement for the VAT exemption.
HMRC appealed to the Upper Tribunal (UT) against the FTT decision and in a judgment published on 9 January 2024, the UT dismissed HMRC’s appeal.
What This Means for Charities
This ruling appears to relax conditions for VAT exemption, potentially affecting HMRC’s policy on event admission fees, alternatively, they could choose to appeal the UT decision. Charities currently charging standard rate VAT on event tickets should assess whether they can reclaim VAT based on this decision.
Next Steps – Seek Expert Advice
If your charity currently charges standard rate VAT on admission fees to events, this decision could open the door to significant VAT refunds. Contact S3TAX today to explore your options and ensure compliance with the latest VAT regulations.