Government has added 29 museums and galleries, which offer free admission to the public, to the VAT refund scheme as part of its commitment to free public access to collections displayed in national museums and galleries, which begins 1 June 2017
The VAT refund scheme allows museums and galleries to receive a refund of the VAT incurred on the goods and services purchased to display, house, maintain and publicise the collections on free display.
Under normal rules, VAT is only reclaimable on goods and services which are used to make an onward taxable supply. A museum or gallery that does not charge for entry is not making taxable supplies and therefore is not able to recover the VAT it incurs.
However, the refund scheme which is set out in section 33A of the VAT Act 1994, was introduced to ensure that what would otherwise be irrecoverable VAT does not stop a body from allowing free admission.
The measure which adds additional institute to the scheme, beginning 1 June 2017, will mainly benefit the institutions newly admitted to the scheme but it will involve negligible compliance costs and only has minor costs to the Exchequer.
Some of the institute that have been added includes the new Royal Academy of Arts which opens in 2018; The Regimental Museum of the Royal Highland Fusiliers; Dean Castle; and the University of Nottingham.
The policy paper on amendments to the VAT refund scheme for museums and galleries is available here.
