Weekly VAT News

RCB 3 (2025): VAT treatment of income received from charity fundraising events

HMRC have published Revenue and Customs Brief 3 (2025) on the VAT treatment of income received from charity fundraising events. VAT exemption applies to the supply of goods and services by a charity or qualifying body in connection with an event where the primary purpose of the event is to raise money and the event is promoted as being primarily for the raising of money. The brief follows the Upper Tribunal’s decision in Yorkshire Agricultural Society. The UT confirmed that the primary purpose of an event must be fundraising, but that there can be more than one primary purpose, and where the purposes cannot be separated in importance, the requirement for the VAT exemption can still be satisfied. The UT also held that UK law was incompatible with EU law in requiring an event to be promoted primarily for the raising of money, but that under the Marleasing principle the UK legislation could be interpreted to conform with EU law by deleting the word ‘primarily’. The brief states that, following the UT decision, “HMRC’s policy remains that the primary purpose of the event must be that of fundraising and that the event must be advertised as a fundraising event”. To demonstrate that fundraising was a primary purpose, there must be “objective documentary evidence” to support that the event was organised as a fundraising event. If a charity or qualifying body believes that their event has more than one primary purpose, they must be able to provide evidence and an explanation as to why the purposes cannot be separated in terms of their importance. The brief advises that HMRC guidance on Charity fundraising events: exemptions will be updated in accordance with the brief. (Contact: Lucy Lowe)

DHL Air (UK) Limited: Retroactive end-use relief authorisation – UT

In 2016-17, DHL Air (UK) Limited imported seven civil aircraft from the United States. At the time of importation, the aircraft were eligible to be imported with end-use relief at a zero rate of duty. However, DHL Air’s authorisation for end-use relief had expired. DHL Air applied for retroactive authorisation in 2017; HMRC refused and assessed DHL Air for customs duty. DHL Air appealed the assessment, and the First-tier Tribunal held that HMRC should review their decision, providing directions for that review. DHL Air appealed the FTT’s decision to the Upper Tribunal on the basis that it erred in its interpretation of the law regarding retroactive authorisations and in the directions. The Upper Tribunal has upheld the FTT’s decision. DHL Air considered that its authorisation application should have been considered as a renewal of its previous authorisation, which would mean that it could be made retroactive. The UT agreed with the FTT’s findings that an authorisation made under the Union Customs Code (which applied when the retroactive application was made) could not amount to a renewal of an authorisation made under the Community Customs Code (under which the previous authorisation was made). Also, the 2017 application had a different geographical scope from the original authorisation, and accordingly could not qualify as a renewal. The UT also upheld the FTT’s findings as to what could potentially constitute the ‘exceptional circumstances’ that would justify retroactive authorisation, which were included in the FTT’s directions to HMRC. Finally, the UT found that the FTT had not erred in law in not including in its directions a requirement for HMRC to treat DHL Air the same as it did other operators in 2017; there was no evidence that DHL Air had been treated differently. The UT dismissed DHL’s appeal. (Contact: Bob Jones)

HM Treasury publishes Tax Policy Making Principles

On 12 June 2025, HM Treasury published Tax Policy Making Principles, which sets out the principles that “underpin the government’s approach to delivering tax policy changes through the single major fiscal event cycle, and how it will engage with stakeholders during tax policy development.” The first principle is predictability and sustainability, and includes the government’s commitment to a single annual major fiscal event. Where possible, the government will indicate “a clear direction of travel for the tax system”, such as through the Corporate Tax Roadmap. Secondly, the government will take a “smart and agile approach” to consultation, such as by taking a more flexible approach to the timing of the publication of supporting documents and prioritising frequent engagement with tax professionals. Finally, the government will ensure that tax policy making is “open and transparent” and will explore options for the creation of a dedicated resource to track technical tax announcements. (Contact: Andrew Clarke)

Spending Review 2025

On 11 June 2026, the Chancellor of the Exchequer (Rachel Reeves MP) presented the results of the government’s Spending Review 2025 to Parliament. The document confirmed a real terms growth in funding for HMRC over the 2025 Spending Review period, and provides details of what HMRC intend to do with the additional funding. The HMRC settlement provides funding of £6.4 billion in 2028-29 to put in place measures to close the tax gap, first announced at Autumn Budget 2024. From 2026-27 to 2028-29, the government will provide HMRC with an additional £500 million of funding “to make HMRC a digital-first organisation.” An additional £1.6 billion will be allocated to modernise and reform HMRC’s IT and data infrastructure. (Contact: Donna Huggard)

CJEU VAT case calendar

On 19 June, the CJEU will deliver its judgment in Bulgarian posts on the provision of universal postal services.

Dbriefs webcast

On Thursday 19 June 12.00, there will be a Dbriefs webcast on Addressing the tax and legal impacts of sustainability in the supply chain. The webcast will be hosted by Gareth Pritchard, and the panel will discuss incentives and regulations, the wider tax implications of sustainability-driven changes to supply chains, and practical insights and examples.