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Wine tasting and VAT

A wine retailer is holding a wine tasting, with tickets costing £15, of which £5 will go to a specified charity.  Do they have to account for VAT on all the £15, or just on £10?  ie Is the VAT £2.50 or £1.67?

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£2.50

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08th Feb 2013 15:48

Seconded

£2.50

The customers pay £15 for a wine tasting; that's the value of the supply. What the wine merchant does with the money afterwards is immaterial to the value of the supply.

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By neileg
08th Feb 2013 15:57

If you really want to be tax efficient

Ask the customer for £10 and a donation to the charity not forgetting to get them to sign up for gift aid. Suggest that an appropriate donation would be £5

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Voluntary donation

This reminds me of the Live Aid conundrum.  The tickets were priced at £25 and the government said that VAT was due on the lot, even though £20 of it was supposed to be a donation.  Th government did eventually agree that VAT was due just on the £5 with £20 being a suggested voluntary contribution, as this was the intention.

I would say that if this is a fund raising event and you price the tickets at £10 plus a £5 voluntary donation to the charity (which you will pass on), then VAT is only due on the £10.  Here's the rub though - someone MUST be able to get in with their £10 if they want.

Here are some notes on this from HMRC.

Hope this helps.

Will All The Income For A Non-Qualifying Event Be Subject To VAT?

When a fund-raising event does not qualify for exemption, it is open to a charity or any other body to set a basic minimum charge which will be standard-rated, and to invite those attending the event to supplement this with a voluntary donation.

The extra contributions will be outside the scope of VAT if all the following conditions are met.

It is clearly stated on all publicity material, including tickets, that anyone paying only the minimum charge will be admitted without further payment.The extra payment does not give any particular benefit (for example, admission to a better position in the stadium or auditorium).The extent of further contributions is ultimately left to ticket holders to decide, even if the organiser indicates a desired level of donations.For film or theatre performances, concerts, sporting fixtures, etc., the minimum charge is not less than the usual price of the particular seats at a normal commercial event of the same type.For dances, and similar functions, the minimum total sum upon which the organisers are liable to account for VAT is not less than their total costs incurred in arranging the event.

If the publicity material for a fund-raising event suggests that those paying a recommended extra amount are more likely to be admitted than those paying merely the basic ticket price, then the extra amount becomes part of the consideration for a supply of services, rather than a donation, and as such is subject to VAT at the standard rate.

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