HMRC updates guidance on charity fundraising events

17 June 2025| CATEGORIES: Charity, fundraising, HMRC guidance| TAGS: fundraising, New guidance, Revenue & Customs Brief, VAT

HM Revenue & Customs (HMRC) have published Revenue & Customs Brief 3 (2025) on the VAT treatment of income received from charity fundraising events. This Brief updates HMRC guidance following an Upper Tribunal (UT) ruling in the Yorkshire Agricultural Society case.

Background

The Brief offers clarification on the VAT relief available under Group 12, Schedule 9 of the VAT Act 1994, specifically addressing supplies made by charities and other qualifying bodies during fundraising events. It is essential for those organising such events to understand when the VAT exemption applies.

Charities can claim VAT exemption on supplies made ‘as part of an event held to raise funds for their charitable activities’. UK law states that an event must clearly be organised and promoted primarily to raise funds, and attendees must be aware of its fundraising purpose.

It should be noted that routine trading, e.g. operating a shop or bar, does not qualify for exemption.

Key points from the Upper Tribunal ruling

Two key takeaways from the UT’s decision which found in favour of Yorkshire Agricultural Society are:

• Multiple ‘primary’ purposes are allowed
  The fundraising objective can coexist with other equally important aims, as long as fundraising remains one of the main goals.
• Promotional material need not emphasise fundraising
  The law says that the event must be ‘promoted as being primarily for the raising of money’. However, the UT found this to be incompatible with European legislation. Applying the Marleasing principle from EU law, the UT held that the legal requirement to promote the event primarily for fundraising should be ignored. This means that the event must still be promoted as a fundraising one but does not need to emphasise this as a primary purpose.

HMRC’s Policy Response

Following the UT decision, HMRC confirm in the Brief that:

• The event’s primary purpose must include fundraising.
• Charities must advertise the event as a fundraising initiative.
• If more than one primary purpose exists, it must be evidenced and justified.
• Ordinary commercial activities earning incidental income remain outside the exemption.
• Regular trading (e.g., shops or bars) counts as business-as-usual and is not exempt.

Organisers are advised to retain objective documentary evidence, e.g., invitations, posters, proving an event was planned specifically for fundraising. It must be an extraordinary activity, distinct from normal operations.

Other aspects that have not changed

HMRC reiterates:

• A maximum of 15 events of a similar nature in the same location can benefit from exemption per fiscal year.  If 16 or more such events are held, all such events become taxable — it is not possible to exempt 15 events and then treat the 16th as taxable.
• The existing anti-competition clause remains. This restriction prevents distortion of competition with other suppliers of similar events which do not benefit from tax exemption.

Charity organisers can now plan events more flexibly, knowing that having more than one principal aim no longer invalidates VAT relief, provided fundraising remains one of them.

The Brief advises that HMRC guidance on Charity fundraising events: exemptions will be updated in due course to reflect the new policy.