CTG press release: 06/10/05

The London Marathon has become a huge fund-raising opportunity for charities and there has been a lot of confusing media attention about the amount of VAT that charities have to pay on the money that is raised. The VAT issue does not affect all charities. It only arises where the charity requires participants to pay a registration fee or insists that a minimum amount of sponsorship is raised before they can take part in the event. In these cases VAT has to be paid on the minimum amount required by the charity. This sum can be relatively small and any money raised in excess of this can be treated as a donation and therefore outside the scope of VAT. Some charities prefer to use this arrangement as they are then entitled to reclaim some of the VAT they incur on their expenses. Where a charity asks individuals to 'pledge' or 'commit' to raise a certain amount of sponsorship, but does not insist on any payment before allowing them to take part in the event, the total amount raised can be treated as a donation and outside the scope of VAT. CTRG believes that there a very simple solution. Nick Kavanagh, Chairman of the Charities’ Tax Reform Group, said today: “CTRG urges Treasury Ministers to demonstrate their support for this massive charitable endeavour by donating to the charities affected an equivalent of the VAT that they have to pay, as they did in the case of the Candle in the Wind CD and on the money raised by Bob Geldof’s Band Aid.”