Supply and consideration ― donations and sponsorship

Produced by a Tolley Value Added Tax expert

Value Added Tax

Guidance

This guidance note looks at donations and sponsorship for VAT purposes. In particular, it considers when a payment will be consideration for a supply and therefore potentially within the scope of VAT.

For an overview of supply and consideration generally, see the Supply and consideration ― overview guidance note.

For detailed commentary on the legislation and case law, see De Voil Indirect Tax Service V3.104.

Is a donation consideration for a supply?

If a monetary donation is freely given and the donor does not expect to receive anything in exchange, it will not be viewed as consideration for any supply. The payment is outside the scope of VAT and therefore no VAT needs to be accounted for by the person receiving the donation.

HMRC has suggested the following questions will be relevant when seeking to establish whether a donation is unconditional / freely given:

Question	Significance
Does the donor receive anything in return for the payment?	If the donor receives something in return this suggests the donation may in fact be consideration

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