VAT exemption update: Upper Tribunal decision in Yorkshire Agricultural Society case prompts HMRC policy clarification

Following the recent Upper Tribunal (UT) decision in Yorkshire Agricultural Society [2025], HMRC has published Revenue and Customs Brief 3 (2025) regarding the VAT treatment of supplies made by charities and other qualifying bodies in connection with fundraising events.

Background

Under Group 12, Schedule 9 of the Value Added Tax Act 1994, charities and other qualifying bodies may exempt supplies of goods and services made as part of events held to raise funds for their charitable activities. A key condition for this exemption is that the event must be clearly organised and promoted with the ‘primary purpose’ of raising funds for the benefit of the charity or qualifying body.

Events that incidentally generate profit, but are not primarily organised for fundraising, do not qualify for the VAT exemption.

Upper Tribunal decision

The UT confirmed that the legislation allows for more than one primary purpose to exist. While fundraising must be a primary purpose, it need not be the sole purpose. The UT recognised that fundraising can be inextricably linked with furthering a charity’s broader charitable purposes.

Importantly, the UT also clarified that an event does not need to be promoted ‘primarily’ for fundraising purposes. It’s sufficient that the promotion of the event incorporates fundraising as a purpose.

HMRC’s updated position

Despite the UT’s broader interpretation, HMRC has reaffirmed that:

• Fundraising must remain the primary purpose of the event,
• Events must be advertised or promoted as fundraising events, and
• Charities and other qualifying bodies must retain objective documentary evidence demonstrating that the event was organised as a fundraising event.

Where an event has more than one primary purpose, HMRC expects a clear explanation and supporting evidence showing why these purposes cannot be separated in terms of importance.

Additionally, HMRC considers that the VAT exemption applies only to events that are ‘out of the ordinary’, and not business as usual. Therefore, semi-regular or continuous activities, including trading, are less likely to be viewed by HMRC as an ‘event’ for the purposes of the relief.

Our comments

The UT decision does widen the scope of the VAT exemption such that events where there is more than one primary purpose could potentially now fall within the exemption. Despite the UT’s broad interpretation of ‘primary purpose’, it appears that HMRC will continue to apply the definition narrowly with a requirement for fundraising to be the primary purpose and for an event to be promoted as a fundraising event. Although, HMRC do seem willing to accept more than primary purpose subject to the evidential requirements.

Charities should also be aware that ‘regular’ fundraising events may now face increased scrutiny as HMRC could challenge the application of the VAT exemption. HMRC has confirmed that the existing limit of 15 events of the same kind in the same location per fiscal year remains unchanged.

In light of the updated guidance and the binding nature of the UT decision, charities may wish to review their fundraising activities to assess whether the VAT exemption could now apply under the revised interpretation.

For further advice or assistance in applying this guidance, please get in touch.