A recent decision in the High Court has confirmed the way charities should apportion VAT for business and charitable activities.
HMRC has decided not to appeal the decision in the Church of England Children's Society (CECS) case.
CECS employs professional fundraisers to secure regular donations from members of the public. Those donating at least 5 per month receive a copy of the charity's newsletter three times a year.
The issues were whether VAT was recoverable on the fundraisers' fees and the costs of producing the newsletter.
To decide on the issue of the fundraisers' fees, the High Court followed the recent judgment of the European Court of Justice in Kretztechnik AG v Finanzamt Linz. This means that if the capital-raising transaction is for the purpose of the business's economic activity,...