VATWatch - July 2025
VAT treatment of income received from charity fundraising events
Following an Upper Tribunal decision in January 2025, HMRC have released a VAT treatment update for supplies by charities and qualifying bodies related to fundraising events. Charities and other qualifying bodies who plan to raise money through fundraising events should acquaint themselves with these updates.
VAT deduction on the management of pension funds
HMRC announces a further policy change to VAT deduction on the management of pension funds. The new policy will apply from 18 June 2025 and this brief is relevant to:
- businesses and other taxable entities that provide pension funds for their employees
- pension administration and asset management service providers
- pension fund trustees and pension providers
- tax advisers
CIOT/ATT Tax Technology Conference 2025
I attended this conference in Birmingham at the beginning of June and thought you might appreciate a summary.
The day started with a keynote speech from Professor Michael Mainelli who described AI as a very enthusiastic puppy – it wants to make you happy so it will give the answer it thinks you want, even if that means making stuff up.
We then heard from Craig Ogilvie from HMRC with an update on MTD for Income Tax. He told us that 70% of HMRC stuff is already digital and the move is towards “digital first”. 6 million people are using the HMRC app.
Emma Rawson from the ATT talked a bit about digitisation and was really interested in e-invoicing. She acknowledged that the UK is behind the curve, but hopes that means we can learn from others who have already implemented it.
Jane Mellor talked about how professional standard are there to protect us. AI doesn’t change the main principles of the PCRT but there are certainly things to think about such as transparency, and whether it needs to be covered in letters of engagement.
After lunch, there was a panel discussion on the ethics of AI. Someone asked the question as to whether if someone had paid for tax specific AI, would HMRC see that as taking reasonable care. There wasn’t a clear answer on that!
We can’t just blindly rely on AI, and need to use the same checks that we would if it was produced by a person.
There were then 4 breakout sessions, and I attended one called AI at HMRC: Optimising Digitisation in Tax Administration.
It has been estimated that £45 billion a year could be saved across government by clever use of AI. HMRC has already been using AI for over 20 years, but there is currently an appetite to do more with it.
We had a round table discussion about issues with HMRC and how they might be solved with the use of AI. A lot of us pointed out that it is the really simple stuff – the amount of time that is wasted chasing letters and responses, how ridiculous it is that the VAT Number now comes out in a paper letter, etc. They need solving first, before moving onto any technical stuff. The 2 from HMRC seemed really keen to take feedback and hopefully there will be more work like this with agents as their plans progress.
During the day, there were lots of Tax Technology providers giving demos and showing what they could do.
Overall, a really useful day (and I got 3 pairs of socks)!
Thank you for taking the time to read this VATwatch round-up.
