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Liability for VAT on income

A charity not registered for VAT is money we collect to by theatre tickets counted as our income

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We are a charity not registered for VAT we have group of members who are a theatre group. Basically we collect members money when they wish to visit a theatre we then pay from the charity account for the tickets hence basically the received monies go into our account then straight out to purchase a number of theatre tickets. Our problem is we purchase approx £21,000 worth of theatre tickets per year and if this money is counted as income to the charity we would exceed the £85,000 VAT threshold.  Is it charity income or not and will it make us liable to register for VAT

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22nd Apr 2019 19:44

The VAT threshold is £85k in a twelve month period (ok a year) how does 'buying' tickets at £21k exceed that?
The issues raised here are legion- why does the charity pay for its' members to visit the theatre - are those fees reimbursed? what does the charity's trust deed say? what other activity happens? who benefits? why does my brain now ache.......

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22nd Apr 2019 23:40

Neither of these charities appear to have the provision of theatre tickets to people who have paid for them as an objective:

https://beta.charitycommission.gov.uk/charity-details/?regid=255468&subid=0

https://beta.charitycommission.gov.uk/charity-details/?regid=288877&subid=0

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23rd Apr 2019 08:51

A group of friends and acquaintances organising theatre trips isn't necessarily problematic. But the scale of this, and the fact that it is done through the charity's books may be.

First, it's questionable whether theatre-going is charitable activity. The group bookings look as if it is (or could be) a for-profit trading activity.

I would suggest carving out the theatre-going group as a separate entity with a separate bank account. You should have some kind of rules/constitution dealing with the common problems - what happens if I pay but can't go? Who gets to go if there is more demand than available tickets, etc.

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to paul.benny
23rd Apr 2019 09:24

In the charities I am involved with, we make it a rule that you don't put money that isn't the charity's own income into the charity bank account. So proceeds of bake sales for other charities, collections for leaving presents etc all have to go through someone else's account...

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