I act for a charity whose only income is from donations and legacies plus a major awards dinner it hosts each year. The dinner earns a surplus and is described as an ‘awards dinner’ rather than a ‘fundraising dinner’. The profit and loss account is basically as follows:
Income
Ticket sales £80 000
Donations from supporters £40 000
Expenses
Venue hire £10 000
Caterer £70 000
Other costs £30 000
Surplus £10 000
All of the costs include VAT and I wonder if my client can voluntarily register for VAT and account for output tax on the ticket sales claiming input tax on the expenses a net refund of £5 000. Output tax £80 000 x 1/6 less input tax £110 000 x 1/6 = £5 000. I always say that if something sounds too good to be true...
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