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Which VAT Exemption is Available

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4th November 2013

A recent case at the Upper Tier Tax Tribunal concerning a Student’s Union considered the refusal of voluntary disclosures submitted for VAT overpaid on events such as gigs, balls and dances.

The Student’s Union had submitted voluntary disclosures for VAT overpaid on certain events. Essentially, they claimed that the Cultural Services Exemption applied to gigs, events and balls, and that the Fresher’s Ball and Graduation Balls should be considered as exempt fund raising.

The First Tier Tribunal had concluded that the Cultural Services Exemption could not apply as the sabbatical officers were paid a sufficiently large amount and took a sufficient role in the ultimate decision making process, therefore the condition regarding ‘managed and administered on an essentially voluntary basis’ could not be met. The First Tier Tribunal had also commented that there was not enough evidence to demonstrate that the Fresher’s and Graduation Balls were primarily to raise funds for charity.

The Upper Tribunal agreed with the First Tier Tribunal regarding the Cultural Services Exemption; however it considered that the First Tier Tribunal had not given the fund raising exemption enough consideration and therefore referred it back to a differently constituted First Tier Tribunal.

This case is of interest as it gives an indication that the Tribunal will consider the applicability of the Cultural Services Exemption to activities other than typical theatre and zoo admissions etc. The case also highlights the complex nature of the Cultural Services Exemption and the conditions that must be satisfied for the taxpayer to be treated as an ‘eligible body’ for the purposes of the exemption.

Whilst the applicability of the fund raising exemption has been referred back to the First Tier Tribunal for further consideration, one of the key messages is that the Commissioners viewed that the activities must be clearly shown to be taking place for charitable purposes.


About the Author

The VAT People are leading VAT and Customs Duty consultants based in the North West of England. We work with a wide range of businesses throughout the UK as well as assisting our accountancy colleagues to unravel the thorny VAT issues for their clients. We are one of the UK's largest and most comprehensive sources of VAT and Customs advice, our consultancy team having over 140 years of experience in VAT and Customs gained in either HMRC or a Big 4 accountancy practice environment.

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Article Published/Sorted/Amended on Scopulus 2013-11-07 11:55:56 in Tax Articles

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