Freelance Fundraiser’s Jottings

22 April 2008

Txt donations – the VAT dilema

For years the Institute of Fundraising and major charities have been trying to get the cost down of making donations via TXT on your mobile. One of the last major hurdles is VAT, as the mobile phone companies say they can’t distinguish between the various premium-rate lines they operate.

The HMRC (Her Majesty’s Revenue & Customs) stated 2 years ago that VAT was not chargeable on text donations, but the phone companies are charging charities an estimated £1m a year in VAT. Neither are they then returning the money in the form of a corporate donation.

However, at last the HMRC and the telephone companies have met and begun discussions on how to get round this problem. It would appear that all the phone networks are in favour of the no VAT charge, but they claim it is a very complex business and there will be no quick fixes to it.

We will have to wait and see if the phone companies follow through their words with real actions, in the meantime, try and choose a more cost effective way to donate to your favourite charities, preferably one that lets you Gift Aid your donation as well. That way, your £1 is worth £1.28 to the charity, which is better than losing 17p in unnecessary VAT!

1 Comment »

  1. Its such a dilema, texting can be such an effective (or it should be) tool for fundraisers, but its not cost effective. One of the biggest issues in Ireland with this is that the operators (except in exceptional circumstances) arent willing to waive their profits and so the cost/profit ratio to the charity is so low that you would be mad to take it on. Its good to see that doesnt seem to be the issue in the UK. Although I cant help feeling if they really wanted this to happen it would have happened by now?

    Comment by conorbyrne — 30 April 2008 @ 2:59 pm | Reply

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