VAT treatment of membership fees and nature of philanthropy

The taxpayer is the governing body for most freemasons in England Wales and the Channel Islands. It has net assets of £70m is a non-profit making body with 175 000 members split into 6 500 different lodges. Some members can belong to more than one lodge.

The issue was whether the monthly subscription fees paid by members qualified for VAT exemption on the basis that the taxpayer provided services to members of a ‘philosophical philanthropic or civil nature’ (VATA 1994 Sch 9 group 9). The services must also be ‘in the public domain’.

HMRC agreed that the taxpayer had philosophical and philanthropic aims but said these were not its only or main aims. It also had social aims as well as intentions for self-improvement.

The First-tier Tribunal noted that one of the main philanthropic aims of the body was to ‘support freemasons and their dependents...