In a Brief on VAT and digital advertising by charities, HMRC has confirmed that location-targeting services can be zero rated.
HMRC has previously ruled that most digital advertising should be subject to VAT, and had raised assessments to recover VAT from some advertising agencies. However, these costs were generally passed on to charities, amounting to millions of pounds of irrecoverable VAT.
The Charity Tax Group (CTG) has been engaging with HMRC on this point for approximately three years. In July this year, CTG received a letter from HMRC, confirming that VAT was no longer considered due on internet search browsing advertisements, except where they appear on personal social media accounts.