Whether the admissions relief is a significant benefit to the sector will depend on the ability of venues (particularly theatres and concert venues), to re-open buildings for live audiences on a viable basis in adherence with government guidelines issued for COVID-19 in February 2021. Online events have been the main way for venues to continue to operate during the crisis without a live audience.
Selling access to watch an event online is subject to different VAT rules from selling physical admission to your venue. When selling access to consumers to online content, you need to consider whether what is being supplied is an ‘electronically supplied service’ (ESS). This is important because unlike admission to a physical venue, an ESS is treated as liable to VAT in the customer’s country, not the country of the supplier/venue.
What is an Electronic Supply of Services?
An ESS is characterised by being essentially access to online content (e.g. a video recording of a concert/performance/event) delivered without human intervention, where the consumer is in control of the timing of delivery and obtains immediate access to the content after payment. As such, supplies of ESS to UK consumers are liable to 20% VAT, not the reduced rates, and supplies to EU consumers are liable to VAT at the rate applicable in the customer’s country.
Where however the internet is being used as a means for an audience to watch a performance which is happening live, as they watch/listen in real time (not a pre-recorded event), at a scheduled performance time, then HMRC’s comments on ‘live online performances’ in their guidance ‘VAT on admission charges to attractions’, suggests that this would not be regarded as an ESS and the temporary 5% and 12.5% admission rates in the UK could apply to all income, unless the performance was covered by the cultural exemption. This would also be subject to the cultural venue being the direct supplier – rather than an online platform.
Where you are selling the initial ticket for the live performance, which also gives the person a right to “watch again”, that could be seen as a mixed supply but it may be possible to argue that later watches are ancillary. In this case, you should seek specific VAT advice tailored to your circumstances.
Liability to register in the EU - ESS
Until 1 January 2021, if the annual value of your total cross-border ESS to consumers in the EU was below £8,818 per year, then the place of supply was the UK and UK VAT was due. Over that threshold, the place of supply was where the consumer was located and in that case, the UK supplier was required to register in each EU member state where customers were based, or register and account for EU VAT on supplies to EU consumers under the VAT Mini One Stop Shop (‘MOSS’) in the UK.
When the UK left the EU on 1 January 2021 it lost the benefit of the £8818 threshold so that any ESS sale to an EU consumer would render the supplier liable to register in the EU under MOSS for non EU suppliers. UK cultural businesses supplying pre-recorded events therefore need to be aware of the VAT registration requirements in the EU. These are changing on 1 July 2021 when the EU introduces a new scheme for registration called the One Stop Shop. Click here for more information.