Student Unions & the VAT Fundraising Exemption

A recent VAT case shone a spotlight on the VAT fundraising exemption. Four student unions (Loughborough, Keele University, Nottingham Trent and Bournemouth University), who were all registered charities, appealed against HMRCs’ decision that none of their events qualified for the fundraising exemption. The unions ran a range of social facilities and organised various social activities and events at their respective universities.

Both UK and EU legislation provide an exemption for supplies made in connection with charity fundraising events subject to certain conditions. The exemption conditions within UK legislation relevant to the case were that no more than 15 events of a similar nature should be organised at the same place in any one year and the exemption should not give rise to distortion of competition.

The Tribunal considered the meaning of a fundraising event and held that all the events concerned in the appeal, except Bournemouth University’s summer ball, were not fundraisers. This was because the organising of social events was simply the unions’ normal business and fundraising was not the primary purpose.

The rest of the decision was thus focused on the isolated summer ball, which met most of the exemption conditions but fell down on the distortion of competition point. By their own admission, the union was in direct competition with commercial event organisers in the area and thus the conditions of both EU and UK legislation were breached.

Interestingly, the Tribunal held that the requirement in UK legislation that an event must be promoted as a fundraiser is ultra vires. However, this is likely to have limited impact as the majority of charities publicise the fundraising purpose of their events to increase levels of interest and donations. The Tribunal also considered whether the UK’s restriction of 15 events was unnecessary and decided that the EU directive expressly allows member states to put limits on the number of events.

The case is a salutary reminder that VAT exemptions are an exception to the normal rule that supplies of goods and services are taxable. Charities need to be clear at the planning stage that the primary purpose of an event is to raise funds. It does not mean that events cannot have a dual purpose but an event which is normal business for a charity cannot achieve VAT exempt status simply by calling it a fundraiser.

It also reminds us that tribunal decisions are not binding. The unions had followed the decision in the Cheltenham & Gloucester Students Union case where certain student union events did qualify for the VAT fundraising exemption. The tribunal in the current case specifically disagreed with that decision.

If you have any further questions please email Leila -


Leila Ong

Leila is a manager in our VAT team.

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