No VAT to be charged on charity donations by text

Howard Lake | 4 March 2008 | News

Donations to charity by text will not attract VAT, according to the Treasury. Jane Kennedy MP, Financial Secretary to the Treasury, confirmed this in a written answer to a question raised by Mark Oaten MP. This stated: “Donations to charity, including those made by text message, are outside the scope of VAT-which means that no VAT is payable on them.”
SMS text-based marketing and fundraising solutions provider Vir2 Ltd welcomed the clarification. It had asked its constituency MP to raise the matter.
The practice of charging VAT on the whole amount of any donation was previously widespread practice amongst UK mobile networks. Vir2 aruge that removing the VAT charge makes donation by text from mobile, for small donations, “equally as efficient as debit or credit card”.
Vir2 works with Charity Technology Trust, the charity that promotes effective use of technology by charities, to provide text donation facilities to over 120 UK charities.
The campaign was headed by Roger Craven, Managing Director of Vir2 Ltd. As well his letter in October last year, Liberal Democrat MP Mark Oaten has also raised an Early Day Motion, co-sponsored by Peter Bottomley MP, calling for the removal of VAT charges on text donations. Craven has been writing to and lobbying MPs to support the Early Day Motion, which now has the signature of 55 MPs.
The Mobile Data Association backed the campaign as did the 160 Characters Association of mobile messaging professionals.
The issue of VAT on text donations was first raised following the 2004 Asian Tsunami appeal when over £1 million was donated by text in just three days. On that occasion HMRC gave a one-off donation to the appeal in compensation for the VAT charged.
Roger Craven commented: “Text donations are now comparable with other ways of collecting donations in terms of the proportion payable to charity. Potential donors are as likely to carry a mobile as a credit card, but unlike credit cards, mobile phones are also a way for charities to communicate their appeals as well as an easy and convenient means of small value payment.”