What are the VAT options for challenge events?

  • If a charity has no pre-existing agreement with either the donor or event organiser, and simply receives a donation from the participant or event organiser – this is likely to be a donation outside the scope of VAT.
  • If a charity (or its subsidiary) sells places as disclosed agent of an event organiser, with the event organiser taking responsibility for the event itself, you are seen as supplying agency services to the organiser. Your consideration for VAT purposes is your margin. This is the difference between what the participant must pay before departure (registration fees, deposits plus any minimum fundraising) and what you pay to the event organiser. This margin is gross of standard rated VAT if the organiser is in the UK. Any funds raised on top of this are outside the scope of VAT.
  • If the charity or its subsidiary organises its own challenge event as principal, putting together a package of travel and/or accommodation and taking responsibility for the event, or if it acts as undisclosed agent (so participants do not know who the actual organiser is), the event is likely to fall under the special VAT Tour Operators’ Margin Scheme (‘TOMS’). Under TOMS VAT applies to the margin (as above), however the margin is outside the scope of VAT with a right of recovery (so effectively zero-rated) if the event takes place outside the UK.

Want to discuss further?

Helen Elliott

Partner

Ross Palmer

Senior Tax Manager

Gillian McKay

Senior Tax Manager

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