Charity News: VAT and digital media

The VAT treatment of advertising expenditure is an area where charities receive special treatment as unlike commercial entities the supply of advertising to a charity is zero-rated, which given that many charities are not registered for VAT themselves and therefore unable to recover input tax, can result in a significant cost saving.

The means by which charities conduct their advertising is a rapidly changing one, with increasing use of digital media in recent years to reach new audiences and expand a charity’s message. This rapidly developing area has left HMRC trailing a little and has created some uncertainty whether this form of advertising was eligible for the VAT exemption. Following a campaign by the Charity Tax Group, in August HMRC clarified its policy relating to the zero rating for charity advertising that is delivered through digital media in a letter to them, and further clarification was provided in September with publication of Revenue & Customs Brief 13 (2020), which confirmed that the following forms of digital advertising can be zero-rated when supplied to a charity:

  • audience targeting
  • behavioural targeting
  • channel targeting
  • content targeting
  • daypart targeting
  • demographic targeting
  • device targeting
  • direct placements on third party websites
  • location targeting
  • lookalike targeting
  • pay-per-click adverts
  • retargeting

Not all digital advertising supplied to a charity is zero-rated though. Advertising services are excluded from the zero rate if a member of a public has been selected by or on behalf of the charity to receive the advertising. This will include email advertisements and those posted on social media/subscription website accounts based upon the user’s known likes, interests or location.

Guidance: https://bit.ly/2HKlyAt

Our full Charity Newsletter can be found here.

For more information on our charity services please visit our website or contact Frank Harling on 01932 830664 or charities@wardwilliams.co.uk

 

About the author

Frank originally joined PKG in 2005 before it was acquired by Ward Williams in 2010.  Having started at PKG as a Trainee he qualified firstly as an Certified Accounting Technician, before moving on and becoming qualified with the ACCA.

Frank is based at our Uxbridge office as Corporate Services Manager. Frank manages a portfolio of both audit and non-audit clients in a range of different sectors and industries, as well as assisting with the running of the corporate services department.

He has extensive experience of providing Audit, Accounts preparation, Corporation Tax, VAT, CIS and Payroll. Frank also holds a solid experience with regards accounting and audit in a number of specialist areas, including charities, solicitors and pension schemes.

frank.harling@wardwilliams.co.uk

01895 236335