A journey through Time and Space!
The reissue of VAT Notice 701/58 “Charity advertising and goods connected with collecting donations is a welcome reminder of the rules for this valuable relief.
Zero rate VAT is available for supplies of all types of advertising time and space to charities in any medium which communicates with the public.
The wording is subtle and essentially means supplies to a charity of advertising on the TV, radio, billboards, on the side of vans or indeed in generally available magazines and newspapers would qualify because the audience is the general public. However, direct mail marketing would not qualify as a zero rated supply of advertising, because direct mail isn’t a supply of time and space on someone else’s medium but a method of marketing to a target audience of selected individuals or groups. Neither would goods and services supplied in relation to a charity advertising on its own website qualify, but its supplies of advertising space on the website to other charities would.
It is very important to get this right otherwise the supplier risks a challenge from HMRC. All too often we see charities issuing eligibility declarations to suppliers in error facing a VAT only invoice from the supplier at a later date.
Overall, there are no real changes in how the relief applies from the 2002 version of this Notice , with only very minor changes in the wording, but we do note HMRC have not taken the opportunity to keep up with the trend for people to wear a plastic bracelet to show their support for a cause. It was generally hoped the Extra Statutory Concession which gives zero rate relief for the supply to a charity of lapel stickers and similar tokens for example the Remembrance Poppy, given away free as an acknowledgement to donors would be extended to these but the Notice confirms that relief is still only available for paper stickers, ribbons, artificial flowers and metal pins and badges.
If you would like further information or advice on this relief or indeed if you would like to explore the possibility of making a retrospective claim for relief, please contact Ellen Main-Jeffrey, Head of VAT Services on 01926 468707 or use our on-line contact form.