Examples of primary-purpose trading are:
- provision of educational services by a charitable school or college in return for course fees
- sale of goods manufactured by disabled people who are beneficiaries of a charity for the disabled
- a charitable art gallery or museum holding an art exhibition in return for admission fees
- a residential care charity providing residential accommodation in return for payment
- sale of tickets for a theatrical production staged by a theatre charity and
- sale of certain educational goods by a charitable art gallery or museum.
It is conceivable that HMRC will seek to charge tax on a trading activity which, while it might be considered to be a charitable activity, is actually undertaken by a charity that does not have the power to conduct such activities.
Ancillary primary-purpose activities are those which are so closely aligned to the main trade that it is accepted that they are themselves of a primary purpose: for example, the sale of food and drink in a restaurant or bar by a theatre charity to members of the audience.
For more information, see HMRC’s guidance on charities and trading.
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