Amendments to the VAT refund scheme for museums and galleries
Published 27 March 2017
© Crown copyright 2017
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This publication is available at https://www.gov.uk/government/publications/vat-refund-scheme-for-museums-and-galleries/amendments-to-the-vat-refund-scheme-for-museums-and-galleries
Who is likely to be affected
Those museums and galleries added to the list of bodies entitled to benefit from the VAT refund scheme.
General description of the measure
This statutory instrument adds further museums and galleries that allow free public admission to the VAT refund scheme.
Policy objective
The government is committed to free public admission to the main museums and galleries, and the VAT refund scheme supports this policy.
Background to the measure
Under the normal rules, a person can only reclaim VAT on the goods and services they purchase which are used to make an onward taxable supply. A museum or gallery that doesn’t charge for entry isn’t making taxable supplies and therefore isn’t able to recover the VAT it incurs.
The refund scheme is set out in section 33A of the VAT Act 1994. It was introduced to ensure that what would otherwise be irrecoverable VAT doesn’t deter a body from allowing free admission. It refunds VAT paid on purchases made to support free rights of admission to a museum or gallery. The list of qualifying bodies is set out in the Schedule to SI 2001/2879, and the Treasury has the power to add bodies to the list or remove them from it.
The bodies and relevant museums to be added meet the conditions to be included in the scheme, although in common with the national libraries, 8 are included only in relation to their permanent public collections.
This statutory instrument also makes minor amendments such as to update addresses.
Detailed proposal
Operative date
It’s intended that this statutory instrument will come into effect from 1 June 2017 subject to negative resolution.
Current law
Section 33A of the VAT Act 1994 refunds VAT paid by museums and galleries on purchases made in connection with free rights of admission to the public. Under section 33A (9), the Treasury may by order specify the bodies to which refunds are made, and the date from which claims can be made. There is a single list of bodies in the Schedule of SI 2001/2879 and consequently amendments are made to the Schedule.
Proposed revisions
The Schedule to SI 2001/2879 will be amended to reflect the additions and changes already referred to.
Summary of impacts
Exchequer impact (£m)
| 2017 to 2018 | 2018 to 2019 | 2019 to 2020 | 2020 to 2021 | 2021 to 2022 |
|---|---|---|---|---|
This amendment supports the Exchequer in its commitment to free public admission to the main museums and galleries and to ensure that the list of bodies entitled to benefit from the VAT refund scheme is kept up to date.
Economic impact
This measure isn’t expected to have any significant economic impacts.
Impact on individuals, households and families
Adding further museums and galleries to the VAT refund scheme for museums will increase support for free public access to collections.
Equalities impacts
This measure shouldn’t have an impact on any of those groups sharing protected characteristics.
Impact on business including civil society organisations
This measure is expected to have a negligible impact on businesses and civil society organisations.
Approximately 30 institutions who are newly admitted to the scheme will benefit from this measure as they can now apply for VAT refunds. One off costs include familiarisation with the rules. On-going costs include applying for VAT refunds and the administrative burden associated with the additional institutions applying for VAT refunds is expected to be negligible.
Operational impact (£m) - HM Revenue and Customs (HMRC) or other
The refunds will be dealt with by established HMRC procedures, so there’ll be no extra operational cost.
Other impacts
There are no other impacts expected.
Monitoring and evaluation
This policy will be kept under review through communication with taxpayer groups affected by the measure.
Further advice
If you have any questions about this change, please contact Kerry Smith on Telephone: 03000 566007 (email: kerry.smith1@hmrc.gsi.gov.uk).
Declaration
Jane Ellison MP, Financial Secretary to the Treasury, has read this tax information and impact note and is satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impacts of the measure.