Arts organisations will be able to claim partial exemption from VAT on production costs, and reclaim past overpayment of VAT, following a ruling by HM Revenue and Customs (HMRC) in response to an appeal earlier this year by Garsington Opera (AP194). The company maintained that HMRC was wrong to link its income solely to ticket prices, which are exempt from VAT. The revised policy agrees with Garsington that there is also a direct link to “taxable supplies such as corporate sponsorship, touring, programmes, CDs, intellectual property rights, and the occasional supplies of production props and equipment”. HMRC has identified touring, recording and project-specific sponsorship as examples of “when production costs relate to taxable supplies”, though this does not include general corporate sponsorship. HMRC confirmed to AP that arts organisations will now be able to reclaim VAT paid on such costs for a period going back at least three years. Clare Adams of Garsington Opera told AP that the organisation was delighted. “We know that a lot of arts organisations were watching our case, and the fact that they have changed the ruling is very beneficial,” she said.