Charity Fundraising Events: New VAT Clarification You Need to Know
If your organisation is a charity — or you support charities by helping run events — a recent case at the Upper Tribunal has brought clarity to the VAT rules surrounding fundraising events.
HMRC has now issued updated guidance (Revenue & Customs Brief 3: VAT treatment of income received from charity fundraising events), and it’s crucial to understand how this affects exemptions and VAT liabilities going forward.
🎪 What Counts as a Fundraising “Event”?
To be eligible for VAT exemption, an “event” must be:
- Clearly organised and promoted to raise money for charitable purposes.
- A planned occasion with a defined outcome (e.g. a concert, auction, fun run, or ticketed dinner).
- Not a regular commercial activity, such as a permanent café, shop, or ongoing service.
Crucially, even if the event does not raise a profit, it can still qualify as VAT-exempt — as long as it was promoted and organised as a fundraising event.
🎯 The Primary Purpose Rule
A key takeaway from the ruling is that:
“The primary purpose of the event must be that of fundraising.”
However, HMRC clarified that fundraising can be “a” primary purpose, not necessarily the only purpose.
Why this matters:
Some charity events may have multiple objectives — e.g. raising awareness, recruiting volunteers, or celebrating achievements — but as long as fundraising is a main component, VAT exemption may still apply.
📣 Promotion Is Key
The law requires that:
- The event must be promoted as being primarily for fundraising.
- The word “primarily” was ruled by the Tribunal as not essential, but the event still needs to clearly emphasise its fundraising purpose.
In other words: your charity doesn’t need to say “this is primarily for fundraising”, but the materials and messaging should make that purpose obvious.
🧾 HMRC’s Updated Stance
Following the ruling, HMRC’s guidance now confirms:
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If an event has more than one purpose, charities must be able to prove:
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Evidence of the fundraising objective (e.g. tickets, posters, documentation).
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A clear explanation of how the fundraising element cannot be separated in importance from other goals.
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Charities must keep in mind:
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The same event type can only qualify for VAT exemption up to 15 times in a financial year.
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If you exceed that, VAT must be charged on further events of that type.
⚠️ Penalty Risk for Getting It Wrong
Events that don’t meet the fundraising definition — or where documentation is missing — may lose VAT exemption.
That can result in:
- Backdated VAT charges on income.
- Interest and penalties for non-compliance.
✅ Merranti’s Advice
Whether you’re a registered charity or a business supporting fundraising efforts, you should:
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Review your event planning processes to ensure fundraising is clearly documented and promoted.
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Keep evidence such as event flyers, email campaigns, and trustee meeting notes showing fundraising intent.
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Count how many similar events are being held to avoid breaching the 15-event rule.
📨 If you’re involved in running, advising, or accounting for a charity, don’t take VAT exemption for granted. Getting this wrong can be costly.
👉 Find more VAT updates in Merranti’s newsletter here
Alternatively, you can get in touch to confirm your event qualifies before the invoice is sent.
