With tonight’s TV programme being the culmination of the Sport Relief fund raising activities we will see a significant amount of text donations. The good news is that Jane Kennedy MP, Financial Secretary to the Treasury has now said that donations made to charities by SMS are not liable for VAT opening up the way to making this simple way of donating to charities much more worthwhile.
Following the success of the Asian tsunami appeal in 2005 where VAT was suspended on SMS donations, there has been extensive lobbying to have this position standardised. Until now, VAT has been charged on SMS donations, putting them at a disadvantage compared to other means of giving. Text donations are a highly effective way for charities, particularly small ones, to raise money quickly and to communicate with supporters. The practice of charging VAT on the whole amount of any donation was previously widespread practice amongst UK mobile networks. Removing the VAT charge makes donation by text from mobile, for small donations, equally as efficient as debit or credit card. Congratulations here go to The Mobile Data Association and 160 Characters who have backed the campaign. Mike Short Chairman of the MDA commented that “now we have policy clarity we will need to develop a cohesive plan that blends the right mixture of comfort to charities and trust for donors”. His suggestion is interesting- “To be successful there may need to be dedicated charity short codes”. Precedents within the EU exist in Germany, Italy and the Czech Republic who are doing something similar. We will have to see how the Revenue views it Stuart
