HMRC Sends VAT Warning Letters to Prize Draw Businesses

HMRC is sending “One to Many” campaign letters to businesses operating prize draws with both paid and free entry routes.
HMRC’s position is that prize draws are not VAT-exempt and that paid entries are subject to VAT at the standard rate.
Businesses are being asked to review their VAT treatment, correct any errors on past VAT returns, and pay any VAT due.
HMRC warns that disclosures made after receiving a letter may be treated as prompted if errors are later found in a compliance check, potentially increasing penalties.

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.