Cultural Services – VAT exemption

The ‘cultural services’ exemption covers an eligible body’s supply of a right of admission to a museum, gallery, art exhibition or zoo (but not a botanical garden); or to a theatrical, musical or choreographic performance of a cultural nature. See HMRC VAT Notice 701/47: culture for further information.

The scope of the exemption is currently being examined relation to whether or not sales of admission tickets to films shown at the National Film Theatre and at various film festivals could fall within the exemption. In Revenue And Customs v British Film Institute [2014] UKUT 370 (TCC) HMRC’s appeal was dismissed. HMRC has been granted leave to appeal and has sought a reference to the CJEU.

An eligible body for these purposes is the same as for Education except that, in addition, the body must be managed and administered on a voluntary basis by persons who have no direct or indirect financial interest in its activities. In determining who manages and administers a body, one must consider only those who take decisions of last resort concerning policy – particularly in financial and strategic areas – and who carry out the higher supervisory tasks. People who carry out purely executive tasks (those who implement, rather than take high-level decisions) can be ignored. The services must be provided by a non-profit-making organisation and any profits made from exempt admission fees must be applied to the continuance or improvement of the facilities made available.

Opportunities for extending recovery for charities providing cultural services (eg theatrical productions) were provided by the decisions in the cases of HM Revenue & Customs v Mayflower Theatre Trust Ltd [2006] EWCA Civ 116 and Garsington Opera Ltd v Revenue & Customs [2009] UKFTT 77 (TC). HMRC’s views on Garsington and Mayflower can be found in following HMRC Manuals

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