§ Miss KirkbrideTo ask the Chancellor of the Exchequer what plans he has to give the same VAT tax privileges to university museums as those that apply to other museums [174335]
§ John HealeyUnder normal VAT rules, VAT incurred on goods and services relating to non-business activities cannot be recovered. Free admission of persons to premises is a non-business activity for VAT purposes, therefore museums which do not charge for admission cannot recover the VAT they incur on related purchases. These principles apply irrespective of the source of the funding used to make the purchases.
In September 2001, the Government introduced a VAT refund scheme that allows the main national museums and galleries which do not charge admission to recover VAT they incur on related purchases. This scheme is designed to remove the obstacle VAT was creating to the delivery of the Government's 1997 manifesto commitment that there should be free access to the main national museums and galleries.
As the Chancellor announced in his Budget statement this year the commitment to achieve free access has been an outstanding success. Building on that success, and in light of the Goodison Review, the Government are considering in the context of the forthcoming spending review the issue of extending the free access commitment for the main national museums and galleries, and the VAT refund scheme that has helped to deliver it, to university museums.