Helping Unions Make Entertainments Make Money

VATangles LLP

Objectives

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?

Who are VATangles LLP?

• VAT consultants specialising in:– Educational bodies

Who are VATangles LLP?

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

Who are VATangles LLP?

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

Who are VATangles LLP?

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

Who am I?

Who am I?

• Noel Tyler

Who am I?

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

Unions – since 1991

Who am I?

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

Unions – since 1991• Worked with Loughborough since 1993

Who am I?

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

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

Unions

Who am I?

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

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

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

with Students’ Unions

Who am I?

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

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

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

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

The Beginning

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

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

• I wrote lead article on

The Beginning

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

• I wrote lead article on– Financial sector

VAT and Entertainments - Historically

VAT and Entertainments - Historically

• Everything subject to VAT;

VAT and Entertainments - Historically

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

VAT and Entertainments - Historically

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

Higher Education Students’ Union

VAT and Entertainments - Historically

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

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

More Recently

More Recently

• 2003 – Hull Truck Theatre

More Recently

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

Services

More Recently

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

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

construction and fitting out

More Recently

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

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

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

VAT and Cultural Services

VAT and Cultural Services

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

VAT and Cultural Services

• 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

VAT and Cultural Services

• 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”.

VAT and Cultural Services

• Eligible Body

VAT and Cultural Services

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

distribute, any profit it makes;

VAT and Cultural Services

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

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

improvement of the facilities made available by means of the supply

VAT and Cultural Services

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

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 and Cultural Services

• VAT saved on ticket sales YES

VAT and Cultural Services

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

VAT and Cultural Services

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

VAT and Cultural Services

• Still being fought for a number of Unions

VAT and Cultural Services

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

of governance under Charities Act 2006

VAT and Cultural Services

• 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

VAT and Fundraising Activities

• Students’ Unions are charitable bodies – always were

VAT and Fundraising Activities

• Students’ Unions are charitable bodies – always were

• Therefore should be entitled to charity VAT exemptions

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 and Fundraising Activities

• VAT saved on ticket sales YES

VAT and Fundraising Activities

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

VAT and Fundraising Activities

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

VAT and Fundraising Activities

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

VAT and Fundraising Activities

• 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”.

VAT and Fundraising Activities

• 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”.

VAT and Fundraising Activities

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

VAT and Fundraising Activities

• 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 –

VAT and Fundraising Activities

• 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 –– (a) that is organised by that charity, or jointly by

more than one charity; and

VAT and Fundraising Activities

• 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 –– (a) that is organised by that charity, or jointly by

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

money; and

VAT and Fundraising Activities

• 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 –– (a) that is organised by that charity, or jointly by

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”.

VAT and Fundraising Activities

• Note 4 to Group 12

VAT and Fundraising Activities

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

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

VAT and Fundraising Activities

• 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

VAT and Fundraising Activities

• 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

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

important purpose – Newsvendors Benevolent Institution

Primary Purpose

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

important purpose – Newsvendors Benevolent Institution

– Possible arguments re: Graduation Balls and Freshers Balls

Primary Purpose

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

important purpose – Newsvendors Benevolent Institution

– Possible arguments re: Graduation Balls and Freshers Balls

– Otherwise must be with the “purposer”

Primary Purpose

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

important purpose – Newsvendors Benevolent Institution

– Possible arguments re: Graduation Balls and Freshers Balls

– 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

Promoted as Primary Purpose

• Again not an EU law requirement

Promoted as Primary Purpose

• 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

Promoted as Primary Purpose

• 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

Promoted as Primary Purpose

• 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.

Promoted as Primary Purpose

• 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

Fifteen Events of a Type

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

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

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

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?

Where are HMRC on this?

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

Where are HMRC on this?

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

Where are HMRC on this?

• 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

Where are HMRC on this?

• 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??

Where are HMRC on this?

• 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??• Requirement to minute intention?

How do we go forward?

How do we go forward?

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

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

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

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• Truly nothing to lose

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• Truly nothing to lose • Join me in the battle!

Any questions?

Thank you for listening