Charity Shortcodes VAT free (finally)

Campaigns: Thurs 30th July 2009

The problem of VAT on SMS donations appears to have been solved with the announcement by all of the mobile operators of a new VAT free range.

Although technically an SMS donation should not have VAT on it, the problem has been in identifying Premium SMS payments that are made as charity donations. In the past, only a handful of high profile campaigns such as this year's Comic Relief have been able to avoide the sales tax.
The solution has come in the form of a number range beginning iwth 70 specifically for donations which any UK registered charities can use. The initiative was developed by a number of organisations, including the Charities Aid Foundation and the Mobile Data Assocaition. SMS donations can now be made VAT free through online services such as txt4giving.
Whilst the VAT issue now appears to have been resolved, the mobile network operators have not seen fit to reduce the high transaction fees for Premium SMS, often as much as 30% of the SMS value. The issue appears to be one of the billing systems run by the operators. Currently they do not allow different payout rates for different SMS customers. Although Comic Relief received 100% of the SMS value, at this stage, it was very much a one-off cirumstance.

Article Links
Press release from the Mobile Data Association.