Share

VAT ruling could 'open the floodgates' for cultural admissions

VAT ruling could 'open the floodgates' for cultural admissions
News

VAT ruling could 'open the floodgates' for cultural admissions1

Finance | Tania Mason | 13 Feb 2013

A recent decision by the tax tribunal in favour of the British Film Institute could open the floodgates for more cultural charities to claim their admission fees should be exempt from VAT.

Last year, the BFI brought a case before the First-Tier Tribunal (Tax and Chancery) that the VAT exemption that already applies to “cultural services” such as museums, art galleries and theatre performances should also cover admissions to cinema screenings hosted by charitable bodies.

The British Film Institute runs the BFI Southbank and the BFI Imax (pictured), the BFI National Archive and BFI Reuben Library, and is a charity governed by a Royal Charter.

According to Withers’ VAT expert Graham Elliott, the BFI's case relied upon a direct reference to European law and contended that the UK’s interpretation of the exemption was wrong, in that it was overly restrictive.

He said the charity’s argument revolved around the meaning of the word ‘certain’, because the European legislation says certain cultural services qualify for the exemption. HMRC had claimed that this meant it could pick which ones qualify and which ones don’t, but the BFI contended that the word ‘certain’ was superfluous.

The BFI’s lawyers cited a number of previous European-level cases which made clear that the word ‘certain’ cannot be used as an excuse to deny exemptions to different types of charity.

Elliott said that the implications of the decision could reach much wider than just the BFI, or even charities that show films. “As HMRC admitted in their evidence, this is a floodgates issue,” he said. “If a cinema is cultural, in a sense what isn’t? How wide are the boundaries of ‘cultural services’?”  

He suggested that charities that run botanical gardens or stand-up comedy shows could conceivably argue now that their admission charges should be VAT-exempt.

“It does beggar a huge definitional boundary question - what will be regarded as sufficiently cultural? It does have a fairly broad application I think.”

Elliott said that HMRC may choose to appeal the decision, but he doubted it would have much success.

“It’s a very welcome development that the UK legislation had been overly restrictive and had strange omissions in it that were unfair,” he said. “The decision looks extremely convincing and if there is an appeal my prediction would be that the appeal will be unsuccessful and the decision will continue to stand.”

 Yearbook

 

Charity Finance Yearbook

The Charity Finance Yearbook is the ultimate reference source for charity finance professionals. Providing updates, advice and trends on accounting and auditing, VAT and taxation, investment and banking, social investment and funding, legal matters, governance, impact, risk, IT and HR.

Philip Anthony
Director
Co-Operative Systems
13 Feb 2013

Good news for the BFI. Completely nuts from a tax gathering and common sense viewpoint.
The largely well heeled BFI voyeurs ;) have little problem with ticket pricing -its not particularly big part of their decision making process in deciding to watch a movie and BFI ticket prices are already subsidised to well below commercial pricing.
&
For the Eurosceptics another reason to exit the EU ...

I look forward to a VAT rebate on my Sky Movie subscription!

Comments

[Cancel] | Reply to:

Close »

Community Standards

The civilsociety.co.uk community and comments board is intended as a platform for informed and civilised debate.

We hope to encourage a broad range of views, however, there are standards that we expect commentators to uphold. We reserve the right to delete or amend any comments that do not adhere to these standards.

We welcome:

  • Robust but respectful debate
  • Strongly held opinions
  • Intelligent relevant discussion
  • The sharing of relevant experiences
  • New participants

We will not publish:

  • Rude, threatening, offensive, obscene or abusive language, or links to such material
  • Links to commercial organisations or spam postings. The comments board is not an advertising platform
  • The posting of contact details for yourself or others
  • Comments intended for malicious purpose or mindless abuse
  • Comments purporting to be from another person or organisation under false pretences
  • Gratuitous criticism, commentary or self-promotion
  • Any material which breaches copyright or privacy laws, or could be considered libellous
  • The use of the comments board for the pursuit or extension of personal disputes

Be aware:

  • Views expressed on the comments board are left at users’ discretion and are in no way views held or supported by Civil Society Media
  • Comments left by others may not be accurate, do not rely on them as fact
  • You may be misunderstood - sarcasm and humour can easily be taken out of context, try to be clear

Please:

  • Enjoy the opportunity to express your opinion and respect the right of others to express theirs
  • Confine your remarks to issues rather than personalities

Together we can keep our community a polite, respectful and intelligent platform for discussion.

Tags

Free eNews

No evidence of criminality at Tower Hamlets, say police

17 Apr 2014

The Metropolitan Police has said that there is “no credible evidence of criminality” following an...

Donations double in one day following Marathon runner’s death

16 Apr 2014

The amount donated to the National Osteoporosis Society, the charity 42-year-old Robert Berry was running...

Sector 'extraordinarily disconnected' from public, CFG chair says

15 Apr 2014

Charities are becoming “extraordinarily disconnected” from donors and supporters who do not understand...

Paula Sussex to be the next Charity Commission chief executive

17 Apr 2014

Paula Sussex, senior vice president, public sector of CGI, has been appointed the new chief executive...

Impact of welfare reforms felt by 95 per cent of Yorkshire charities

17 Apr 2014

A report published today which looks at the impact of welfare reforms in the region of Yorkshire and Humber...

Trussell Trust sees use of its foodbanks 'almost triple' in a year

16 Apr 2014

The number of people using the Trussell Trust’s foodbanks rose from 347,000 to 913,000 in a single year,...

'Technology can offer charities more than just online donations'

10 Apr 2014

Charities are focusing too much on using digital tools for fundraising instead of how technology can be...

Amnesty calls for 'full and frank disclosure' on alleged US surveillance

9 Apr 2014

Amnesty International has warned that alleged mass surveillance by the American intelligence agency NSA...

Virgin Money Giving launches app following year of growth

1 Apr 2014

Virgin Money Giving has launched an app for users after reporting that 30 per cent of traffic to its platform...

Join the discussion

 Twitter button

@CSFinance