Commentary

BB/28/03 VAT—cultural exemption: changes following London Zoo ECJ decision

Part V16 Forms and other HMRC material

BB/28/03 VAT—cultural exemption: changes following London Zoo ECJ decision

BB/28/03 VAT—cultural exemption: changes following London Zoo ECJ decision

Business Brief, Issue 28. 10 December 2003

This Business Brief sets out Customs' new policy on qualifying as an eligible body for the purposes of exempting the right of admission to certain cultural activities. It follows the judgement in the European Court of Justice (ECJ) in the case of The Zoological Society of London (London Zoo), which ruled on the UK's interpretation of the words “managed and administered on an essentially voluntary basis” in EC VAT law.

It explains what businesses affected by the change need to do.

Background

Under UK VAT law, the right of admission to museums, galleries, art exhibitions, zoos, theatrical, musical or choreographic performances of a cultural nature are exempt from VAT when supplied by an “eligible body”. To be an eligible body, an organisation must—

  1.  

    (a)     be precluded from distributing, and not distribute, any profit it makes;

  2.  

    (b)     apply any profits arising from the right of admission to the above cultural activities to the continuance or improvement of the facilities made available by means of the supplies; and

  3.  

    (c)     be managed and administered on a voluntary basis by persons who have no direct or indirect financial interest in its activities.

Customs' published policy was that in order to be “managed and administered on a voluntary basis”, an eligible body must not make any payment for services of a managerial or administrative nature including those carried out on a day-to day basis by an employee or contractor. London Zoo challenged the meaning

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