Helping Unions Make Entertainments Make Money VATangles LLP.

transcript

Helping Unions Make Entertainments Make Money

VATangles LLP

Objectives

• No VAT on ticket sales

Objectives

• No VAT on ticket sales• No VAT on cloaks income

Objectives

• No VAT on ticket sales• No VAT on cloaks income• No VAT on bar sales

Objectives

• No VAT on ticket sales• No VAT on cloaks income• No VAT on bar sales• To minimise the loss of irrecoverable VAT on

purchases re: the above

Who are VATangles LLP?

• VAT consultants specialising in:– Educational bodies

• VAT consultants specialising in:– Educational bodies– Students’ Unions

• VAT consultants specialising in:– Educational bodies– Students’ Unions– Charities and their subsidiaries

• VAT consultants specialising in:– Educational bodies– Students’ Unions– Charities and their subsidiaries– Healthcare institutions

Who am I?

• Noel Tyler

Who am I?

• Noel Tyler• First VAT Consultant to work with Students’

Unions – since 1991

Who am I?

Unions – since 1991• Worked with Loughborough since 1993

Who am I?

Unions – since 1991• Worked with Loughborough since 1993• Currently act for approximately 12 Students’

Unions

Who am I?

Unions• Spend approx. 75% of my working life in or

with Students’ Unions

Who am I?

Unions• Spend approx. 75% of my working life in or with

Students’ Unions• Saved > £5 million for Students’ Unions

The Beginning

• 1990 – New VAT Directive

The Beginning

• 1990 – New VAT Directive– Financial sector

The Beginning

• 1990 – New VAT Directive– Financial sector– Sports clubs

The Beginning

• 1990 – New VAT Directive– Financial sector– Sports clubs– Cultural services

The Beginning

• 1990 – New VAT Directive– Financial sector– Sports clubs– Cultural services– Exemptions for charities

The Beginning

• I wrote lead article on

The Beginning

• I wrote lead article on– Financial sector

VAT and Entertainments - Historically

• Everything subject to VAT;

• Everything subject to VAT;• However !!!!!

• Everything subject to VAT;• However !!!!!• 1996 – Cheltenham & Gloucester College of

Higher Education Students’ Union

• Everything subject to VAT;• However !!!!!• 1996 – Cheltenham & Gloucester College of

Higher Education Students’ Union• Re: Graduation Balls and Freshers Balls

More Recently

• 2003 – Hull Truck Theatre

More Recently

• 2003 – Hull Truck Theatre• HMC & E claimed VAT exemption re: Cultural

Services

More Recently

Services• Would have cost theatre >£2million in VAT on

construction and fitting out

More Recently

Services• Would have cost theatre >£2million in VAT on

construction and fitting out• Why not for Students’ Unions?

VAT and Cultural Services

• Article 132(1)(n) of the Principal VAT Directive

• Article 132(1)(n) of the Principal VAT Directive• Item 2(b) of Group 13 of Schedule 9 to the

Value Added Tax Act 1994

• Article 132(1)(n) of the Principal VAT Directive• Item 2(b) of Group 13 of Schedule 9 to the

Value Added Tax Act 1994– Exempts from VAT “The supply by an eligible body

of a right of admission to a theatrical, musical or choreographic event of a cultural nature”.

• Eligible Body

• Eligible Body– is precluded from distributing, and does not

distribute, any profit it makes;

distribute, any profit it makes;– applies any profits made to the continuance or

improvement of the facilities made available by means of the supply

distribute, any profit it makes;– applies any profits made to the continuance or

improvement of the facilities made available by means of the supply; and

– is managed and administered on an essentially voluntary basis by persons who have no direct or indirect interest in its activities.

• VAT saved on ticket sales YES

• VAT saved on ticket sales YES• VAT saved on cloaks income NO

• VAT saved on ticket sales YES• VAT saved on cloaks income NO• VAT saved on bar sales NO

• Still being fought for a number of Unions

• Still being fought for a number of Unions• Unarguable going forward now due to change

of governance under Charities Act 2006

• Still being fought for a number of Unions• Unarguable going forward now due to change

of governance under Charities Act 2006• However!!!!!

VAT and Fundraising Activities

• Students’ Unions are charitable bodies – always were

• Therefore should be entitled to charity VAT exemptions

• Also available to wholly owned subsidiaries of charitable bodies

Fundraising Activities VAT Exemptions Include Bar Sales!!!

• VAT saved on ticket sales YES

• VAT saved on ticket sales YES• VAT saved on cloaks income YES

• VAT saved on ticket sales YES• VAT saved on cloaks income YES• VAT saved on bar sales YES

• EU Law – Article 131(1)(o) – Principle VAT Directive

• EU Law – Article 131(1)(o) – Principle VAT Directive– Exempts from VAT “The supply of goods or

services by [charitable bodies] in connection with fund raising events organised exclusively for their own benefit”.

• Article 13A(1) continues– “Member States may introduce any necessary

restrictions in particular as regards the number of events or the amount of receipts which give rise to the exemption”.

• Item 1 of Group 12 of Schedule 9 to the Value Added Tax Act 1994 exempts from VAT

• “The supply of goods and services by a charity in connection with an event –

• “The supply of goods and services by a charity in connection with an event –– (a) that is organised by that charity, or jointly by

more than one charity; and

more than one charity; and– (b) whose primary purpose is the raising of

money; and

more than one charity; and– (b) whose primary purpose is the raising of money;

and– (c) that is promoted as being primarily for the raising

of money”.

• Note 4 to Group 12

• Note 4 to Group 12• Exemption applies to up to and including

fifteen events of a type in a location in a financial year

• Where more than fifteen event are help of a type in a location all become subject to VAT

• Fifteen events of a type in a location does not include events of a type where the total funds raised in a week come to <£1,000

Primary Purpose

• Primary Purpose– Not a requirement of EU law - merely an

important purpose – Newsvendors Benevolent Institution

Primary Purpose

– Possible arguments re: Graduation Balls and Freshers Balls

Primary Purpose

– Otherwise must be with the “purposer”

Primary Purpose

– Otherwise must be with the “purposer”– What other ‘primary purpose’ can there be

Primary Purpose

• HMRC can only substitute statement of primary purpose where:

Primary Purpose

• HMRC can only substitute statement of primary purpose where:– They can show purposer is not telling the truth

Primary Purpose

• HMRC can only substitute statement of primary purpose where:– They can show purposer is not telling the truth; or– They can show purposer is confused;

Primary Purpose

• HMRC can only substitute statement of primary purpose where:– They can show purposer is not telling the truth; or– They can show purposer is confused; or– Purposer is truthful but no other reasonable

businessman put in the same conditions would have made the same decision

Promoted as Primary Purpose

• Again not an EU law requirement

• Again not an EU law requirement• HMRC guidelines suggested strapline etc. –

This event is raising funds for ***** Students’ Union, or This is a **** Students’ Union fundraiser

• To appear on posters, flyers and tickets

• To appear on posters, flyers and tickets• Also possibly minuted in Trustees minutes,

pop-up banners etc.

• Again not an EU law requirement• HMRC guidelines suggested strapline etc. – This

event is raising funds for ***** Students’ Union, or This is a **** Students’ Union fundraiser

• To appear on posters, flyers and tickets• Also possibly minuted in Trustees minutes, pop-

up banners etc.• Suggested minuted meetings but these are not

requirements

Fifteen Events of a Type

• Types can include, for example, live acts, DJs, balls, parties, comedy, karaoke, quiz, magicians, conferences

• One Union – Over 50 separate qualifying events per annum

• Events must have their Oxford English Dictionary definition – Blaydon Rugby Football Club

In a Location

• University Campus to be safe

In a Location

• University Campus to be safe; however• May be individual buildings or even rooms

In a Location

• University Campus to be safe; however• May be individual buildings or even rooms• Compass Catering

Where are HMRC on this?

• They don’t like it, but can’t decide why

• They don’t like it, but can’t decide why• About as static as Bambi on Ice!

• They don’t like it, but can’t decide why• About as static as Bambi on Ice!• Latest – constitutions require Unions to

provide social, cultural, sporting and recreational activities

• Also – events of a regular basis??

• Also – events of a regular basis??• Requirement to minute intention?

How do we go forward?

• Union’s position is overwhelmingly strong and correct – Mr John Tallon QC

• HMRC will throw in the towel if they lose the ‘primary purpose’ test

• Potential savings here are substantial

• Potential savings here are substantial• Truly nothing to lose

• Potential savings here are substantial• Truly nothing to lose • Join me in the battle!

Any questions?

Thank you for listening

Helping Unions Make Entertainments Make Money VATangles LLP.

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