VAT and the London Marathon
Howard Lake | 15 April 2004 | News
Requiring charities to pay tax on Golden Bonds runers in the London Marathon is not a new tax, say charity law experts Bates, Wells and Braithwaite. They add that there is a way for canny charities to maximise their VAT savings.
Charity law experts Bates, Wells and Braithwaite have added their analysis to the issue of VAT being levied on charities using the Golden Bond system in this year’s London Marathon. The issue has appeared on the front page of The Times for two days in a row.
The firm of solicitors say that this is not a new tax. If charities buy places in commercially organised events and require supporting runners to raise a minimum sum of sponsorship in order to take part then that minimum sum is liable to VAT. The firm adds that this has long been Customs & Excise’s view of the London Marathon and similar commercial events.
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“What is new,” said Bill Lewis at the solicitors, “is they have put this view in writing, to be published in a revised VAT Charities notice due for release later this month.” He points out that most sponsored runners in the event are not affected by this rule: “if a charity simply asks for a commitment or pledge to raise a certain sum of money, and allows the supporter to run irrespective of the amount they raise, then none of the sponsorship money is liable to VAT.”
He also points out that The Times fails to point out that there is an opportunity here for canny charities. “If you charge the runner registration fee subject to VAT – which could be literally as low as £1, Customs & Excise will let you reclaim the VAT charged on the cost of buying places in the event,” he suggested.
He concludes by recommending that “the way forward to maximise VAT savings is to start charging registration fees, charge VAT on the fees, and cease to require a minimum sum of sponsorship from your runners. Instead set them targets, ask them to make pledges, etc.”
About Howard Lake
Howard Lake is consultant editor of UK Fundraising. He founded the site in 1994 and successfully sold it in 2022. As director of Giving X Ltd he is exploring growing giving on a massive scale.
He is the founder of Fundraising Camp and co-founder of GoodJobs.