According to accounting firm Wilkins Kennedy, Customs is now exploring new ways to collect VAT from a large proportion of the 33,000 runners who have their places bought for them by charities.
Last year Customs gave assurances that if money pledged by runners whose places were purchased by the charities was not a legally binding obligation it would not be subject to VAT. Most charities do not view pledges as legally binding obligations.
‘Customs now appear to be shifting the goalposts,’ said James Selby, VAT director at Wilkins Kennedy. ‘They are saying that if the failure of a runner to meet a minimum pledge in a prior year is taken into account in deciding whether that runner is allocated a place in the following year, then VAT is payable on the money raised.’
Fundraising organisations invariably take into consideration the amount of money being pledged before allocating places to fundraisers in oversubscribed events, such as the London Marathon, according to Selby.
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