What forms of advertising qualify for VAT relief?
The VAT relief can be used in relation to any medium which “communicates with the public”. This includes all the conventional advertising media such as television, cinema, billboards, the sides of vehicles, newspapers and printed publications. The important factor is whether the advertisement is placed on someone else’s “time or space”. If it is not, and is instead on the University’s own “time or space” (e.g. on the University’s website or in University publications) there is no scope for zero-rating.
If space is purchased to advertise on other items, such as beer mats, calendars, or the reverse of till rolls, this will also be covered by the zero rate relief. The sale of the items themselves will not be VAT free (unless they qualify for other reliefs for example as books or children’s clothing).
In order to qualify as “communicating with the public” the advert must communicate with the general public, although this can include businesses and small groups e.g. readers of a trade magazine. However, it cannot include selected individuals or groups such as people who are:
- selected by individual home, business or e-mail address whether named or not;
- individually named people, all those at the same address such as family groups or everyone in a particular building.
Direct mail and telesales do not qualify for the VAT relief as they are addressed to selected individuals or groups.
Examples of other items which are excluded from the relief include:
- anything on a charity’s own Internet website;
- advertisements where there is no supply of time or space to the charity, for example, an advertisement on a charity’s own greeting cards;
- exhibition stands and space;
- services of distribution; and
- commemorative items whether or not they bear the charity’s logo, for example, pens and adult clothing.
Design and production of advertisements
Provided it is intended that the advertisement will be placed in purchased or donated advertising time or space, the supply of design or production of the advertisement will qualify for relief e.g. the design of a poster or the filming or recording of an advertisement to be broadcast.
Goods which are closely related to the design and production of an advertisement can also qualify for VAT relief, for example:
- a finished article like a film or recorded cassette;
- an element to be incorporated in the advertisement such as a photograph, picture or a sound track; or
- all alternative versions of an advertisement produced, to see which works best, even if it is the intention that only one version will be used.
NB: If we create our own advertisement then there is no supply of advertising to us, so we are not able to obtain zero-rating on the purchase of equipment and raw materials used in creating these advertisements.
How to obtain the zero-rating relief
You must issue a charity advertising certificate to your supplier(s).