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HMRC have published further guidance on the VAT treatment of tickets sold before 1 December 2008 for entertainment events.
The guidance covers various matters, including electronic cash registers, refunds, treatment of tickets to theatre, football, etc, extension to the normal time limit for raising VAT invoices, flat-rate scheme, credit notes, guarantees for import VAT, importation of works of art, antiques and collectors' items eligible for reduced valuation, and TOMS calculations.
The Revenue has confirmed that it will adopt a 'light touch' in relation to situations where a business has partly refunded VAT on tickets to entertainment events that were purchased before the VAT rate reduction on 1 December 2008, in relation to an event that is taking place after this date.
The department's view is that a customer buying a ticket for a theatre, concert or sporting event is paying for the right to attend the event.
So, if a payment was made before 1 December 2008 (at 17.5% VAT), there is no scope under any circumstances for the rate of VAT to be adjusted to the lower 15% rate.
Many taxpayers and advisers considered that the lower rate of VAT could apply if the event took place after 1 December 2008.
HMRC will not seek to recover any VAT paid back to customers up to 21 January 2009: a decision that was welcomed by independent VAT consultant Neil Warren.
He said: 'Overall, the challenges concerning the reduction in the rate of VAT have been dealt with extremely well by both HMRC and the profession.
'The ticket issue has been one of the few grey areas.
'However, the positive point is that the rules will work to everyone's advantage later in the year because any tickets bought before 1 January 2010 will benefit from the 15% rate of VAT, even though the event could be taking place after this date when we are back to 17.5% again.'
