New regulations designed to simplify the VAT rules governing charities that raise funds through ‘challenge’ events are now in force.
Events that test the physical and mental endurance of sponsored participants through mountain-climbing, cycling, or trekking across inhospitable landscapes have become a popular way for charities to raise funds.
Denis Holly, Director of VAT at the Midlands offices of accountants and business advisers Horwath Clark Whitehill, said: “Until now VAT regulations have been complex for charities hoping to claim tax exemptions.
The new regulations are the result of consultations between the Revenue and Customs and major charities who were asking for change.
Introduced from August 1, they clarify the VAT treatment of challenge events which include an element of travel and/or accommodation.
In future fundraising events that include a package of travel and accommodation, or bought-in accommodation, or more than two nights accommodation from a charity’s own resources do not qualify for the fund-raising VAT exemption but will be subject to the normal VAT rules.
Some charities may have already signed contracts, are in negotiation with suppliers of the events or have already publicised them. If this is the case then charities can still account for VAT using their previous procedures.