VAT challenge - Broadcasted “live” event – Is it covered by the Cultural Exemption?
A recent First Tier Tribunal (FTT) VAT case which will be of interest to any organisation which qualifies as an “eligible body” under the VAT Cultural Exemption legislation This enables their admission income to a “theatrical, musical or choreographic performance of a cultural nature” to be treated as Exempt from VAT.
Whilst a FTT case doesn’t create a legal precedent, this judgement does add to a body of cases on this specific type of admission income in the context of access to a broadcast of a live performance – viewed in a venue remote from the place of the actual performance. It’s a case that also illustrates the way in which VAT legislation – written years, indeed decades ago – does not always keep up with developments in technology to enable a supply delivered, in a different medium, to qualify for the same VAT treatment.
In this case a charity – Derby Quad Limited – sold tickets at the cultural hub that it ran – to broadcasts of live National Theatre performances. This type of event is typical of those held at venues and cinemas in both the commercial and charity sector and as Derby Quad did qualify as an “eligible body” under the Cultural Exemption guidance it treated the ticket income as VAT Exempt.
HMRC’s argument was that the admission was not to see a live performance but a film – albeit of a live performance. We have already seen cases through the courts as to the VAT treatment of admission to a film – notably Chichester Cinema at New Park Ltd and the British Film Institute case – where it was determined that the VAT Exemption did not apply. The question was therefore on the differences between a broadcast of a live performance as opposed to admission to the live performance itself.
The FTT agreed with HMRC that there was a difference – driven by the lack of interaction between the audience and the performers – and therefore the admission income to such a broadcast could not be seen as VAT Exempt income.
We have seen other cases which look at the progression of technology and its interaction with the VAT treatment. The News Corp case dealt with the application of the Zero VAT rate for access to digital newspapers as opposed to the paper version – deciding that they were different types of supply for VAT purposes. The VAT law has now been amended to enable inclusion of digital subscriptions, but the point is that, as ever, the interpretation of existing VAT legislation cannot be assumed to apply as technology affects the delivery of that supply.
It all goes to explain why, when we as VAT specialists, are asked about the VAT treatment of a supply the answer will often be – “Well, it depends”.
If this case raises questions as to the VAT liability of your supplies, or those of your clients, then please do get in touch and we’d be happy to discuss those concerns.
As you know we are now the Indirect Tax team within the Xeinadin Group, so you can contact your usual Centurion VAT adviser or use our new group contact email – IndirectTax@xeinadin.com
This note is provided for information only and specific advice should always be sought.