»Ê¹ÚÌåÓýapp

S529 Income Tax Act 2007, S483 Corporation Tax Act 2010

»Ê¹ÚÌåÓýapp issue of fund raising by a local body was considered by the courts in the case of British Legion, Peterhead Branch, Remembrance and Welcome Home Fund v CIR [1953] 35 TC 509 - see BIM24475. »Ê¹ÚÌåÓýapp courts found that the fund raising activities in that case amounted to a trade - the activities being carried out on a significant scale in a manner akin to a commercial activity. »Ê¹ÚÌåÓýapp courts allowed a deduction for the costs that would have been incurred had not local volunteers given freely of their time and services in delivering the fund raising activities.

»Ê¹ÚÌåÓýappre is however an exemption for the profits of certain fund-raising events undertaken by charities and voluntary organisations. In any case where the exemption applies, you should not assess the profits arising to a charity or voluntary organisation (for example, a local committee or Round Table) from activities such as the occasional sale of goods from shops or stalls, the running of a donkey derby, fireworks displays, carnivals and other events even where the activities amount to trading.

»Ê¹ÚÌåÓýappre are two conditions that a charity or voluntary organisation must satisfy for tax exemption to apply to trade profits arising from the holding of a fund-raising event for charity:

1. the event must be of a kind that falls within the exemption from VAT under Group 12 of Sch 9 Value Added Tax Act 1994; and
2. the profits must be transferred to a charity or otherwise applied for charitable purposes.

»Ê¹ÚÌåÓýapp VAT exemption in (a) above covers events organised by charities and certain non-profit making bodies for charitable purposes or exclusively for the body's own benefit:

• whose primary purpose is the raising of money, and
• that are promoted as being primarily for the raising of money.

»Ê¹ÚÌåÓýapp following events are excluded from exemption:

• Exemption does not apply to any event where in its financial year a charity or body organises more than 15 events of the same kind in the same location. An event is disregarded for this purpose if it is held during a week in which the aggregate gross takings from events involving the charity or body of the same kind in that location do not exceed £1,000. Note that if the limit of 15 events is exceeded, none of the events concerned are exempt.
• An event does not qualify for exemption where accommodation in connection with it is provided by the charity or body (or a connected charity) unless, broadly, the accommodation provided does not exceed two nights in total.
• An event does not qualify for exemption if it is likely to cause distortion of competition and place a commercial enterprise carried on by a person subject to VAT at a disadvantage.

As regards profits from the running of lotteries and football pools, see BIM61600 onwards.