Following discussions between CTG and HMRC a new section in the Making Tax Digital VAT Notice 700/22 has been introduced on charity fundraising events, relaxing the digital links reporting requirements (see full details below). Other changes include updates to guidance on the turnover test, following the rules when you’re exempt, digital links, supplies made by third party agents and supplies received has been updated. Guidance on use of supplier statements and petty cash transactions have also been added.

Welcoming the addition of the guidance on charity fundraising events, CTG Chairman, John Hemming, said:

“When HMRC was developing the VAT Notice for Making Tax Digital, CTG was asked to comment on early drafts. We highlighted the potential practical difficulties that charities would face in meeting the digital links requirement where there was a charity fundraising event (like fétés) collecting cash. Often these events are run by volunteers and with limited internet/computer access, making it impractical to maintain digital links between the individual supplies made. HMRC had not considered these types of situation, but officials have listened and responded in a pragmatic way, allowing special treatment for charities in these circumstances. This relaxation of the digital links requirements should make record-keeping for charity fundraising events less onerous for charities and the Charity Tax Group will continue to work with HMRC to ensure that the wider digital links requirements are implemented in a practical and proportionate way.”

Further information on Making Tax Digital for charities (including an overview of the digital links requirements) can be found here.

4.3.4 Charity fundraising events

 A charity fundraising event can include a number of supplies that would need to be recorded on a VAT return. Charities may find it difficult to meet the strict digital record keeping requirements for events run by volunteers. Therefore, HMRC will accept that charities can record digitally all supplies made relating to the event as if it were a single invoice, and all supplies received can be treated similarly.

The following rule has the force of law:

Where supplies are made or received during a charity fundraising event run by volunteers you may treat all supplies made as covered by one invoice for the event, and all supplies received as covered by one invoice for the event, for the purposes of the digital record keeping requirements.

This relaxation only varies the requirements on maintaining records using functional compatible software. It does not change any other record keeping requirements set out in VAT legislation.

Example

A church fete is being run for a charity. During the event the volunteers create a record of the supplies made. When the event is over, the charity can record the total supplies made at the same rate of VAT and with the same tax point as a single entry in their functional compatible software and they can record all supplies received as a single entry in functional compatible software.