Touring theatre companies are set to benefit from VAT incorrectly paid on ticket sales. From June 2004, non-profit-making arts organisations that hire theatre venues for their productions should have been exempt from VAT on these ticket sales, but for the past three years HM Revenue & Customs has argued that VAT exemptions only apply to companies that sell tickets directly to the customer. This is now set to change after a recent landmark £50,000 tax rebate granted to Shared Experience theatre company, which has successfully questioned the ruling.
The floodgates are now open for non-building-based organisations to claim back the VAT paid on ticket sales for their performances when they have hired a venue. A key factor for theatre companies is to ensure that their contracts with theatre venues stipulate that the theatres are selling tickets on their behalf as a ticketing agency. However, VAT will not be re-claimable from ticket sales through third party ticketing agents.