Non-profit Making Organisations (VAT)

Treasury written question – answered on 16th October 2006.

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Photo of Vincent Cable Vincent Cable Shadow Chancellor of the Exchequer, Liberal Democrat Spokesperson (Treasury)

To ask the Chancellor of the Exchequer

(1) how much VAT revenue was collected on merchandise sold by non-profit-making organisations on behalf of charities in each of the last five years for which records are available;

(2) if he will seek to allow VAT (a) exemptions and (b) reductions on merchandise sold by non-profit-making organisations on behalf of charities.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

The information requested is not available. HM Revenue and Customs does not collect data on VAT relating to individual goods and services.

The sale of merchandise at certain fundraising events organised by, or to raise funds for, charities and certain non-profit-making bodies is already exempt from VAT. In addition, the sale of donated goods by a non-profit-making organisation or a charity subsidiary is zero rated when any profits from the sale are transferred to a charity.

Under agreements governing the application of VAT reliefs throughout the EU, successive Governments have agreed with European partners not to extend any existing VAT zero rates or introduce any new ones. The scope of the exemptions from VAT and reduced rates is also limited by European VAT agreements. It is therefore not possible for the Government to introduce any new VAT zero rates, or to extend the existing exemption for fundraising supplies. Similarly, our European VAT agreements would not allow a reduced rate of VAT that applied only to sales of merchandise by non-profit-making organisations on behalf of charities.

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