JustGiving today announced that it will distribute a rebate totalling £3.3m to more than 9,000 charities after it successfully challenged HMRC’s position that transaction fees should be subject to VAT.

The rebate applies to charities that used the online donation platform between 1 September 2004 and 31 December 2010.

JustGiving first raised the issue of VAT on transaction fees with HMRC in September 2007 and in December 2010 HMRC agreed that transaction fees on donations to charities should not be subject to VAT. JustGiving stopped charging VAT on transaction fees from 1 January 2011.

It has spent the last 18 months negotiating the rebate with HMRC.

Charities who are still members of JustGiving will receive their payment directly into their bank accounts today and those that no longer use the service will get a cheque in the post within a week.

Anne-Marie Huby, managing director of JustGiving, said: “We are proud to have achieved this change for the benefit of all charities using online fundraising platforms.”

As a result of the decision, JustGiving’s own costs will increase by approximately 6 per cent as it is no longer able to recover the VAT incurred on its own costs in full as it used to.