Donations – VATable or not?

In the case of Serpentine Trust Ltd the First Tier Tribunal (Tax) considered the VAT treatment of 'donations' made by four friends schemes to the gallery, which provided the donors with benefits from the gallery.


The VAT Tribunal ruled that the 'donations' were consideration for a VATable supply at the standard rate of supplies of the benefits. The VAT Tribunal applied the principles laid down in the case of Tron Theatre and consequently ruled that the full amount paid for the benefits was the taxable amount subject to VAT, irrespective of their value and any 'donative intent'.


In light of the above, if your clients receive donations or enter into similar schemes, please call our free helpline to discuss the VAT liability of the income that will be generated.  It is often possible to structure the schemes in a way that will maximise the VAT position of the charity.

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