Museums and Galleries VAT refund legislation

HMRC has published draft legislation for the Value Added Tax (Refund of Tax to Museums and Galleries) (Amendment) Order 2017, which is a statutory instrument adding another 30 museums and galleries that allow free public admission to the VAT refund scheme.

Under the normal rules, a person can only reclaim VAT on the goods and services they purchase which are used to make an onward taxable supply. A museum or gallery that doesn’t charge for entry isn’t making taxable supplies and therefore isn’t able to recover the VAT it incurs. The refund scheme was introduced to ensure that what would otherwise be irrecoverable VAT doesn’t deter a body from allowing free admission.

Comments on the Order are due by 21 April 2017.

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