VAT exemption change for ticket admissions to live screenings of theatrical performances
Julie Green · November 10th 2023 · read
First-Tier Tax Tribunal ruling on the cultural exemption and admission to live screening of theatrical performances
The First-Tier
Tribunal has issued a decision that supplies of admission to live screenings of
theatrical performances do not fall with the VAT exemption for culture. The
decision can be found here: Finance and
Tax Decisions
Background
A VAT exemption applies to supplies of admission charges to theatrical, musical and choreographic performances of a cultural nature by non-profit making bodies that are controlled and administered on an essentially voluntary basis.
Derby Quad operates a cultural hub in Derby which includes two cinema spaces, a café-bar and event spaces for hire. Derby Quad contracts with theatre companies for licences to a right to screen plays performed on stage in theatres. The screenings can be “near simultaneous” following satellite transmission of the plays. Derby Quad pays theatre companies a percentage of the proceeds from ticket sales to the screenings, and a small flat fee per simultaneous screening to help offset the satellite transmission costs.
Derby Quad considered that its charges for admission fell within the VAT exemption for culture as it was supplying a right of admission to a theatrical performance of a cultural nature. Derby Quad stated that 84% of audiences “felt real excitement” because they knew the performance was being broadcast live that evening and explained that its audiences attending the live events enjoyed the collective experience of watching as a group.
What did the Tribunal Decide?
The First Tier Tribunal did not consider that the screenings were a modern variant of a theatre performance and did not meet the natural and ordinary meaning of a theatrical performance.
It concluded there are significant differences in the experience including the lack of audience and performer interaction with the critical difference being that the performers would get no feedback from the remote audience. The First Tier Tribunal considered that these interactions which require the audience and the performers to be in the actual same place were crucial features of a theatrical performance.
The Tribunal decided Derby Quad’s ticket sales did not qualify for VAT exemption and were standard rated.
We recommend that cultural bodies that have treated income from livestreaming events as VAT exempt within the last four years including during Covid should take action to review their position.
What Happens Next?
Derby Quad may have the opportunity and intention to appeal the decision to the Upper Tribunal particularly as during Covid HMRC expressly contemplated that live streaming could fall in the cultural exemption.
In the meantime, we recommend that cultural bodies that have treated income from livestreaming events as VAT exempt within the last four years including during Covid when a significant number of live streaming events took place should take action to review their position.
Whether the VAT exemption can apply will depends on individual circumstances. MHA can help you by reviewing the position in relation to past and future events.
To discuss the issue further, please contact the team using the button below.
