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VAT Updates Could Save The NonProfit Sector Millions

Sun Sep 13 2020

HMRC has issued new rules on the VAT due on Digital Adverts when published by charities

New rules from HMRC last week could save the NonProfit sector millions in VAT tax relief on digital advertising.

The amended rules have extended and clarified which types of digital advertising can qualify for zero rate VAT.

It’s hoped that Not-for-Profits will be able to make huge savings on their VAT bills related to digital advertising under these new guidelines.


Previous to this, HMRC’s stance had always been that VAT was due on digital advertising and had in fact raised assessments to recover VAT from advertising agencies but those costs were then passed on to their charitable clients, resulting in millions lost in VAT.

Back in July HMRC eased this stance to confirm that VAT would no longer be due on internet search ads (although would still ne applicable when said ads appeared on personal social media profiles).

Last week, the guidance was further relaxed to allow ads using location targeting would also be exempt from VAT.

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This will not only save an element of VAT cost but makes the application of the policy a great deal simpler, with the only boundary line as between sites where there are personal accounts and ones without.

Charity Tax Group Spokesperson

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In it’s press release the Charity Tax Group (CTG) said the amendments could result in the sector saving millions in VAT each year, allowing the NonProfit sector to spend more of it’s advertising budget on goals directly linked to promoting their chosen cause.


Helpfully, the guidance released, Revenue & Customs Brief 13 (2020): VAT Charity Digital Advertising Relief (to give it it’s full name) also provides Not-for-Profits advice on how to correct overpayments from the applications of the previous policy.


Whilst this is obviously great news for the sector as a whole, the Charity Tax Groups stance on HMRC’s policy relating to social media advertising remains unchanged and they’ll continue to push for future amendments there as well.

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We are delighted that after further positive discussions we have had with HMRC, their view of the VAT status of digital advertising provided to charities has been clarified even further. Not only have they accepted a wider ambit for the zero rate, but the classifications of services, based on their policy, will be much easier to apply than appeared the case before the brief was issued. It is great news for charities.

Richard Bray - Vice-Chair, Charity Tax Group

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Sun Sep 13 2020

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