Revenue and Customs Brief 13 (2020) VAT charity digital advertising relief
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Published 8 September 2020
of this brief
This brief sets out HMRC’s policy in different digital
advertising situations. It also explains what advertisers and their
customers may need to do.
2. Who needs to read this
This brief applies to:
- any body providing advertising services to charities
- the charities receiving such services
- representatives of the charities
Zero rate VAT applies for advertising services supplied by a third
party to a charity when the services are designed for the general
public. The advertisements can be by any method. The zero rate is
explained in detail in VAT Notice 701/58:
goods or services supplied to
However, advertising services are excluded from the zero rate if a
member of the public has been selected by or on behalf of the charity
to receive the advertising. In these circumstances
‘selected’ includes any method of contact, including
It has always been accepted that advertisements supplied by digital
methods have the potential to fall within the zero rate. Revenue & Customs Brief 25/10 explains
HMRC’s policy of pay-per-click charity advertising on sponsored
links, including the treatment of ‘natural hits’ and direct
placements on third party websites. However, digital advertising
services include a level of selection that can make it difficult to
determine if the zero rate can apply.
HMRC has reviewed a range of digital advertising situations. This
brief sets out the policy for those and reiterates the treatment
previously stated in Revenue & Customs
4. HMRC’s policy
The VAT treatment of advertisements can vary. Online advertising
services are complex and constantly changing, but they are aimed at
general audiences rather than at individuals. On that basis, HMRC has
accepted that some, though not all, of the situations we have seen are
eligible for the zero rate.
The information below gives details of items eligible for the zero
rate and those that remain standard rated.
4.1 Zero rated subject to all other
conditions being met
The use of demographic, behavioural and other third-party data to
identify a target audience and placing advertisements related to that
data as they browse elsewhere.
Using cookies to identify people who have visited websites or made
searches related to particular areas of interest and placing
advertisements for related goods and services which are displayed as
they browse elsewhere.
The selection of a specific section of a website on which to place
Selection of specific content for advertisements to appear alongside.
Advertisers choose to target only specific times of day or specific
days of the week, without any decisions involving recipients. This is
because their advertisements are more relevant to those periods.
Use of data from a number of sources, including logged in and
behavioural data, to identify target audiences. The advertisements will
be related to that data as they browse elsewhere.
Advertisers choose to reach only certain types of device.
Direct placements on
third party websites
Placing an advertisement on a website without any decisions
involving recipients. The choice of website is the main consideration.
This is similar to behavioural targeting. When individuals opt in to
provide location data, this information is collected and combined into
large datasets to target audiences who have visited particular areas.
Advertisements relating to that data are then displayed as they browse
elsewhere. No personal data or survey results are collected.
Using cookies to identify potential new customers by looking at
common traits and behaviours of existing customers.
Used to encourage people browsing to click on an
organisation’s link in precedence to other links shown. The
search engine receives a fee every time the organisation’s
website is accessed through the sponsored link.
4.2 Standard rated
Advertisements sent to email addresses are targeted at the
individual recipient and are therefore excluded from zero rating.
The listing of a charity in the results of a search engine. This
happens automatically regardless of any action taken by or on behalf of
the charity and just highlights text from the charity’s own
website. Such results are not considered advertisements for VAT relief.
When individuals log in to their personal pages, sites use tools to
apply advertisements to them when they are signed in. The content will
be related to the individual’s known likes, dislikes, interests
or location, as a signed in member of the website.
HMRC will continue to engage with external stakeholders to ensure we
understand the VAT treatment of changing advertising practices.
5. Design and production of advertisements
Generally, as long as the advertisement being published qualifies
for the zero rate, the copyright, design and production services will
also qualify. VAT Notice 701/58: goods or
services supplied to
charities gives more details.
However, services supplied by copywriters and designers for the
purpose of search engine optimisation, structuring a website so that it
contains as many keywords as possible, do not qualify for the zero
rate. These services involve the optimisation of a charity’s own
website and are specifically excluded from the relief.
6. Making claims or adjustments
VAT Notice 700/45: how to correct VAT
make adjustments or claims gives information on how to make
Businesses that have accounted for and paid VAT on supplies of
charity advertisements that are now considered to be zero rated can
submit claims for overpaid tax.
All claims will be subject to the 4 year time limit in section 80(4)
of the Value Added Tax Act 1994. They can also be considered for unjust
7. More information
Amendments will be made to HMRC’s guidance in VAT Notice 701/58: goods or services supplied to
charities and the VAT Charities
guidance manual to reflect this
If you are in any doubt about the correct treatment of your charity
advertising, please contact the Charities Helpline, Telephone: 0300 123
About the Author
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Article Published/Sorted/Amended on Scopulus 2020-09-08 19:42:37 in Tax Articles