A: The need to answer difficult questions means this entry fee is not for a VAT exempt lottery and is unlikely to qualify for exemption as a “game of chance” either due to the skill/knowledge required. As such, the entry fee would be taxable at the standard-rate of VAT (currently 20%). If the questions were very easy, then this would be akin to a lottery and therefore exempt (but might instead be subject to lottery duty). Paras 4.1 of VAT Notice 701/29 and 2.4 of Duties Notice 458 cover this.
These publications from Markel Tax were correct at the time of going to press and should be considered as principles-based guidance only. To check current validity, call the Markel Tax helpline. ICAEW (as distributor) disclaims all liability for any errors or omissions.
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