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When the University receives donations or contributions they are outside the scope of VAT as there is no supply. These types of income are where the contributor/donor gives the money for no return of goods or services from the University i.e. the donor receives no benefit.

It is important to establish that the donor or provider of the contribution receives nothing in return. Income is often described as a 'contribution' or 'donation' when in fact the provider receives a supply of services in return for their contribution. Examples of income sometimes incorrectly called contributions or donations are:

  • Income received for use of the University's equipment
  • Payment received for the use of our secretarial staff
  • Money received towards the cost of a conference where the funder gets advertising in return

Describing income as a donation does not obviate the need to charge VAT if the substance and reality of the transaction is that money has been given in exchange for the receipt of a benefit.

It is acceptable for the donor to be recognised for their gift, e.g. a small plaque put on the wall, or a building named after them. However, if the donor's logo is on display, or other benefits are received, then the income is probably not a donation, rather sponsorship/advertising.

Please refer to Appendix C to help decide if money received is a true donation/contribution. If in doubt please contact the University VAT department.

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