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Updated Business Brief; Revised content - additional item added.

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M2 PRESSWIRE-10 October 2005-UK Government: Updated Business Brief; Revised content - additional item added(C)1994-2005 M2 COMMUNICATIONS LTD

RDATE:10102005

Contents: 1. VAT: High Court decision - Church of England Children's Society 2. VAT: Recovery of VAT by employers in respect of funded pension schemes - further addendum 3. Issue of VAT Notes 3 2005 4. Correction to Business Brief 16/05: VAT Ruling - Abbey National plc - Virtual Assignments

1. VAT: HIGH COURT DECISION: CHURCH OF ENGLAND CHILDREN'S SOCIETY

This Business Brief outlines the decision of the High Court in Church of England Children's Society (CECS) [2005] EWHC 1692 (Ch) in favour of the charity, and how HM Revenue & Customs intend to apply the decision. HMRC have decided not to appeal.

Background

CECS is a charity with a wide range of activities. To raise funds, it engages professional fundraisers to secure regular donations from members of the public. Those donating at least GBP5 per month receive a copy of the charity's newsletter three times a year.

The VAT Tribunal decided that:

* the fundraisers' fees related to the non-business activity of seeking donations, so the VAT incurred on them was not recoverable.

* the newsletters were not zero-rated supplies of printed matter.

However, they were deemed zero-rated gifts of business assets and input tax on their production and distribution costs was recoverable following the decision of the High Court in West Herts College [2001] STC 1245.

CECS appealed to the High Court against the first part of the Tribunal's decision and HMRC cross-appealed on the second part.

High Court Decision

Fundraising fees The High Court decided that if funds raised...