National museums and galleries ― VAT refund scheme

Produced by Tolley

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • National museums and galleries ― VAT refund scheme
  • What is the VAT refund scheme?
  • Eligibility requirements
  • What is free admission?
  • Are libraries included?
  • Can eligible bodies join VAT groups?
  • What VAT can be recovered under s 33A?
  • What does VAT incurred in relation to ‘free rights of admission’ mean?
  • What VAT cannot be recovered under s 33A?
  • How is a claim made if the body is VAT registered?
  • More...

National museums and galleries ― VAT refund scheme

This guidance note provides an overview of the refund scheme that can be used by certain cultural organisations to recover VAT incurred on costs where they allow people to access the facility free of charge.

What is the VAT refund scheme?

If a museum or gallery grants free access to its premises, then this is not be considered to be a business activity for VAT purposes. Normally, businesses who engage in non-business activities cannot recover the VAT incurred on associated costs. However, a VAT refund scheme exists that enables certain organisations to recover this VAT under VATA 1994, s 33A (eligible body). The organisation must be contained in a list issued by HM Treasury in order to qualify.

A list of the eligible bodies can be found in VAT notice 998.

If an organisation is not currently listed as an eligible body, it cannot exempt its admissions fees from VAT. If a body considers that it should be included in the list of eligible bodies, then it can make a request for inclusion by writing to the relevant government department or administration in the first instance. Completing the form does not guarantee that permission will be granted to join the scheme and ministers make the final decision.

Eligibility requirements

HMRC has stated that the following requirements need to be satisfied before a gallery or museum can apply for permission to use the scheme:

  1. be open to the general public for at least 30 hours per week, without exception

  2. offer free entry (see below), without prior appointment

  3. hold collections in a purpose-built building

  4. display details of free entry and opening hours on the museum website

Notice 998, para 1.7

HMRC also stated that newly eligible museums will also be required to complete a strategic business case as part of the application process.

Once accepted into the scheme the museum will need to provide:

  1. evidence to confirm that they have an obligation to provide or continue

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