Arts organisations face VAT misery on ticket sales

The battle between cultural charities and the tax man intensified this week as two arts organisations received mixed news in their cases concerning exemption from VAT.

The battle between cultural charities and the tax man intensified this week as two arts organisations received mixed news in their cases concerning exemption from VAT.

The Bournemouth Symphony Orchestra lost its appeal against last year's High Court decision that it was not eligible to claim back VAT on ticket sales, a move that would have saved the charity at least £40,000 a year.

The three judges upheld Mr Justice Mann's ruling that the presence of a salaried managing director, Michael Henson, on the orchestra's board of trustees meant that the orchestra was not managed on an "essentially voluntary" basis. This is HM Revenue & Customs' prime condition for a charity's ticket income being VAT exempt.

Meanwhile, Longborough Festival Opera was victorious against an HMRC appeal, which claimed that tax exemption should have been withdrawn after one of the opera's voluntary directors agreed to guarantee losses on a large production. HMRC claimed that this liability gave the director a "financial interest" in the charity.

Last week also saw Conservative MP Robert Walter put forward an early day motion highlighting the fact that the irrecoverable VAT burden on charities was worth at least £400m per year.

Walter's motion called on the Government to "introduce measures to reduce or remove crippling financial burdens on charities".

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