Coming into effect from 1 June 2017, the move is part of the government’s commitment to free public access to collections displayed in 
national museums and galleries. 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, 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 more locally to the Bedrock office the University of Nottingham.
The policy paper on amendments to the VAT refund scheme for museums and galleries is available here. The Bedrock team has experience of working with the cultural sector and can advise on VAT issues for theatres, galleries, museums, and other cultural organisations.
