Despite the level of turnover, your client may not have to register for VAT. This is because Group 13, Schedule 9 VAT Act 1994 exempts the right of admission to a theatrical performance of a cultural nature, made by a public body or an eligible body. You will see the term ‘eligible body’ used across many of the VAT exemptions, but in this context, an eligible body is any body (other than a public body) which:
- is precluded from distributing, and does not distribute, any profit it makes,
- applies any profits made from exempt admission fees under this provision to the continuance or improvement of the facilities made available by means of the supplies, and
- is managed and administered on a voluntary basis by persons who have no direct or indirect financial interest in its activities.
This third bullet-point is the one which may need some explanation as your question does not address this aspect. This condition has been held to mean that the strategic management and decisions are in the hands of a person with no financial interest in the body’s performance, as explained in the HMRC’s manuals via the following links:
https://www.gov.uk/hmrc-internal-manuals/vat-cultural-services/vculture2300
https://www.gov.uk/hmrc-internal-manuals/vat-cultural-services/vculture2400
So in your client’s case, if they are an eligible body, their income from admissions of £80,000 would, in fact, be exempt income and therefore would not count towards their registration threshold.
Bar sales will, of course, be standard rated irrespective of eligible body status and will count towards the VAT threshold. In terms of your client’s third source of income, this will also be taxable and count towards VAT registration. This is because, despite your client’s possible status as an eligible body, the supply they make is not for admission to the performance, but actually a supply of performance services made to the theatre. The theatre is then the entity making the onward supplies of admission to its customers.
As well as admissions to theatrical performances, the exemption under Group 13 includes admissions to museums, galleries, art exhibitions, and zoos and musical or choreographic performances of a cultural nature.
More information on this VAT exemption can be found in VAT Notice 701/47 – Admission charges to cultural events.
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If you have a VAT query why not contact the VAT Advice Line on 0844 892 2470 to discuss the implications. Our team of experts have a wealth of experience and can also provide a written consultancy service at competitive rates.
