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Charity Advertising: Zero-rate VAT relief guidance

This document has been prepared by the University's taxation manager, Mark Smith, to provide guidance to MMU staff on supplies of advertising that can be purchased VAT free. For additional assistance, please contact Mark on extension 1870

Background

The University is charged VAT on most purchases of goods and services. As the University’s main activities of education and research are VAT exempt, it cannot normally recover the VAT it incurs on its expenditure. There are some specific VAT reliefs that the University can claim, by providing an eligibility certificate to its supplier, so that the goods and/or services can be supplied free of VAT, thus saving the University 20% of the cost.

VAT relief is available for advertising services and closely related supplies when supplied to a charity.

 

What is covered by the relief?

All types of advertising service on external media, including staff recruitment adverts, can be purchased free of VAT.

The advertisement can be made in any medium that communicates with the public as long as it is on “someone else’s space” and includes all conventional media such as television, cinema, billboards, newspapers and printed publications and internet sites. However, costs incurred in relation to the University’s own publications and website are not covered by the relief.

The advertisement must be aimed at the general public, which can be widely interpreted to include businesses and small groups but does not include selected individuals or groups.

Direct mail and telesales do not qualify for relief as they are marketing services addressed to selected individuals or groups.

Closely related supplies to a supply of advertising services can also be zero-rated. This relief mainly covers the supply of design or production of an advertisement. It includes the design of a poster of the filming or recording of an advertisement to be broadcast. Goods closely linked to the design or production of the advertisement will also qualify for relief, e.g. any elements to be incorporated into a qualifying advertisement such as image, picture or sound track.

 

Is MMU a charity?

Yes - The University enjoys charitable status as an exempt charity under Schedule 2 to the Charities Act 1993 (amended by the Charities Act 2006).

It is therefore subject to charity legislation but is not required to register with the Charity Commission and is not regulated by it. As an exempt charity, the University does not have a registered charity number.

 

How to claim the relief

A completed VAT relief eligibility certificate must be completed, signed and sent to the supplier along with the purchase order. The supplier can then rely on this certificate as evidence to invoice the University without the addition of VAT.

The relevant certificate for charity advertising is here.

Article last updated: Monday, November 2, 2015

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