The VAT position for cultural bodies such as museums, zoos and theatres has been clarified in Public Notice ‘Culture’ (701/47), published last month by HM Customs and Excise.
The new guidelines have been issued following a judgement of the European Court of Justice (ECJ) in the case of London Zoo (ArtsProfessional issue 34, September 23, 2002). Under UK law, the right of admission to museums and galleries, art exhibitions, zoos, theatrical, musical or choreographic performances of a cultural nature have been exempt from VAT when supplied by an ‘eligible body’. The ECJ ruled on one of the conditions to be met for a cultural organisation to be designated ‘eligible’, which has led to an increase in the number of cultural organisations able to benefit from the VAT exemption on admission charges. The Government has now confirmed that those organisations that would face financial loss if they had to exempt admission charges immediately can continue to tax admission charges, and continue recovering VAT on purchases, while they prepare for the forthcoming change in policy effective from 1 June 2004. To further minimise the impact of the change on affected organisations, transitional arrangements will be set up to protect the position of organisations with major building projects in progress. John Healey, Customs Minister and Economic Secretary to the Treasury, said: “Everyone has a right to enjoy the UK’s cultural heritage and we want to make sure the tax system treats our museums, zoos and theatres fairly. Customs has been working hard to make sure that nobody loses out from the European Court’s decision, and now we think we have found the best and fairest solution for all cultural attractions and their visitors – throughout the UK.” One of the first arts organisations to benefit from the new VAT rules is Theatre Royal Norwich, which during its financial year to March 2003 received a VAT rebate backdated to 2003, amounting to over £1.3m. The Theatre is currently considering how the windfall can be used towards a substantial building refurbishment. For further details of the new VAT rules, see the noticeboard at www.artsprofessional.co.uk
Published: 12-01-2004