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Determining the allowability of input tax on a charity fundraising event.
I act for a big charity that recently held a very successful fundraising dinner. The income from the event was mainly exempt from VAT under the fundraising exemption rules but there were also three sources of zero-rated income: sales of merchandise (children’s T-shirts); advertising space was sold to a charity; and the speaker donated 20 copies of his autobiography which we sold on the night for £30 each. There was also a programme published for the event which we sold for £5 each.
Because there is both taxable and exempt income from the event I have treated all input tax on the costs of the event as ‘residual’ for partial exemption purposes and claimed a percentage of the input tax using the charity’s standard method percentage.
However my colleague in the tax department thinks that the speaker fee (£3 000 plus VAT) and catering costs (£20 000...
