Are Charity Membership Subscriptions VAT exempt ?
Are Charity Membership Subscriptions VAT Exempt ?
The VAT Tribunal decision in the case of the Halle Concerts Society has recently been released. This was concerned, in part, with whether the membership subscription charged by this Charity qualified for the membership VAT exemption.
The Charity runs a popular series of concerts in Manchester. It’s members, as well as having a right to vote and being responsible for the Charity, obtain priority booking rights for these concerts. Was VAT chargeable on the membership subscription was the question. HMRC argued that it was.
The Charity used a number of arguments why it wasn’t, one of which succeeded, which was that the philanthropic exemption applied. This applies to the membership of organisations that have aims of a philanthropic nature. HMRC argued that although encouraging the appreciation of classical music was very laudable, it wasn’t really philanthropic. If it was philanthropic why was the VAT cultural exemption needed ? The Tribunal disagreed and found that philanthropy had a wide meaning, wider than charitable in fact. The Charity could therefore treat is subscription as exempt.
Looking through the cases on the application of the philanthropic membership exemption one is struck by the fact that HMRC seems to keep refusing charities the right to apply it. They then appeal. HMRC run similar arguments at the hearing and yet keeplosing. Organisations involved in activities as diverse as Game Conservation, Rotary and now Classical music have been seen by the Courts as Philanthropic and able to treat their subscriptions as exempt. Yet HMRC still seem to give the impression that the exemption is an exception rather than the norm for charities. The impression I get from the cases is that far more charities qualify for the exemption that are taking advantage of it. For my guide to the VAT rules on membership see Membership VAT Rules
The case can be found here
If you think you might gain from exemption then get in touch. I have been involved in a successful appeal on this question. Contact me