# HMRC to target charities' entrance fees

- Link: https://fundraising.co.uk/2005/08/01/hmrc-target-charities039-entrance-fees/
- Published: 2005-08-01T23:00:00+01:00
- Author: Howard Lake

Organisations that don’t pay VAT on their admission fees are in danger of being 
targeted by the authorities, say experts.

VAT is not paid on entrance fees for organisations in the ‘cultural’ sector including
museums, zoos and theatres. This is on condition that the organisation is managed‘
essentially on a voluntary basis.’

Simon Newark, VAT partner at national accountancy group UHY Hacker Young, said a
recent case involving Bournemouth Symphony Orchestra, caused confusion and charities
should beware:

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“As well as having voluntary board members, the orchestra paid a managing director,
which is common in many other organisations. However, a Tribunal ruled that because
the managing director played a vital role in decision making, the orchestra had 
to pay VAT on the price of their admission tickets.

“Another much earlier case involved the Welsh Mountain Zoo where the widow of the
founder was paid a small pension and rent for use of a garage. Customs sought to
argue that she had a financial interest in the zoo and attempted to deny exemption.
In the circumstances, the Tribunal rightly threw Customs’ argument out, but the 
case does highlight the underlying agenda.

“Lots of organisations have employees paid or remunerated in some way to help with
their day to day running. This case has made it unclear what ‘essentially voluntary’
means and it’s likely that those not paying VAT will be targeted by the tax man 
to test the boundaries. Any organisation unsure if it should be paying VAT on admission
charges should seek professional advice,” added Newark.

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