Is the UK fundraising VAT exemption too restrictive?

The Upper Tribunal (tax tribunal) has held (Loughborough Students’ Union v HMRC [2013]) that the holding of balls by a students’ union was not an exempt supply under the exemption for cultural services. This was because the student union’s activities were not managed and administered on an essentially voluntary basis due to its sabbatical officers being salaried.

However, the tribunal also questioned whether the separate UK exemption for fundraising events by charities was compatible with the EU fundraising exemption on which the UK rules are based and remitted this issue to the First-tier Tribunal (FTT).

If the FTT decides that the restrictions attaching to the UK exemption (namely that the event must be for the primary purpose of raising money and be promoted as such) are contrary to EU law, they would be invalid…

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