VAT

VAT - VAT: the basics - Cultural exemption - Other VAT issues - VAT Q&A

VAT is a complex form of taxation that affects museums in many different ways. While every institution will have a different VAT situation, some of the most common issues are explained in this section.

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Cultural Exemption

A ruling earlier this year by the tax tribunal in favour of the British Film Institute may have implications for cultural attractions that do not currently qualify as an eligible body for the VAT exemption on admission prices. The BFI case was that the VAT exemption should cover cinema screenings hosted by charitable bodies. It argued that the UK’s interpretation of the exemption was overly restrictive and not in line with European legislation.

The decision in the BFI’s favour has much wider implications as it confirms that if a service is cultural in nature, the exemption should apply. The ruling may now lead other bodies that provide cultural services to examine whether a claim for overpaid VAT is possible.

Listed building alterations

HMRC last year removed the zero-rating on approved alterations to listed buildings and scheduled monuments in order to eliminate the incentive it created to change listed buildings rather than repair them. This may have implications for capital projects in museums.

Research projects

As of August 2013, HMRC has withdrawn the VAT exemption for business supplies of research between eligible bodies. This may have implications for charitable foundations and university museums that fund research projects.

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