Vat on crowdfunding income

Hi, we are VAT registered but mostly sell zero-rated goods. we did some crowdfunding to get our e-commerce business off the ground. People that donated to us received a little package of some of our zero-rated goods as a thank you. Does this crowdfunding income need to be at the standard Rate or zero rated as the supply of goods was Zero? Thank you

See: https://www.gov.uk/hmrc-internal-manuals/vat-finance-manual/vatfin5550

Yes I have read this manual but I thought the purpose of this forum is to get help with issue's or questions such as these? Seriously HMRC say you have decide on their guidance and if you get it wrong well that's on you...I'm seeking assistance on my very specific query and is there anyone that can help? So to clarify I think we fall under the non-financial reward model - where zero-rated supply was posed out as the 'reward'. Does this mean that the income received can also be Zero-rated? Because I quote 'Where a contributor receives goods or services that have an intrinsic value (e.g. clothing, tickets, dvd) in exchange for support given, there is a supply for VAT purposes. The VAT treatment will follow the liability of the goods or services provided.'

Hi Cara Savage,
If money is freely given then this would not normally constitute a supply for VAT purposes as there is no supply for a consideration.
If you provide some of these goods and a taxable supply is deemed to be made then the supply would be the liability of the goods themselves and so if you are providing zero rated goods then the supply would be zero rated.
Please see below:
Guidance on determining the liability of the supply of goods or services effected for a consideration.
Thank you. 



 

Hi,

The purpose of the forum is to help and guide a customer to the guidance where answers can be found. Although we can refer to the most appropriate guidance we cannot provide a definitive response.

However, as stated in the previous answer, if you are receiving payments and are providing zero rated products then a supply is being made for zero rated goods and hence the supply is zero rated.

Thank you.