Coronavirus relief for creative charities has been an important point of interest for many accountants. The impact of Coronavirus has been particularly heavy for the creative industries, with theatre, arts and museums being forced to close for many months due to the pandemic.
We take a look at help and HMRC’s advice for charities in these sectors which have been severely affected.
VAT relief
In his Summer Statement, the Chancellor Rishi Sunak announced a VAT cut on hospitality and tourism. From 15th July 2020 until 31st March 2021, the rate of VAT for certain supplies in these industries will be 5%. For charities which operate attractions, this should go some way to aiding recovery from closure, either by reducing operating costs or reducing admission costs to entice patrons through their doors.
Specifically affected is admission to:
- Theatres
- Circuses
- Fairs
- Amusement parks
- Concerts
- Museums
- Zoos
- Cinemas
- Exhibitions
- Similar cultural events and facilities
In the case of admissions, if existing cultural exemptions cover the event or venue then the exemption takes preference.
BTCHub is our Making Tax Digital for VAT solution which allows easy VAT returns for accountants who look after charities.
Creative Tax Reliefs updates
HMRC’s updated guidance for Creative Tax Reliefs reflects the impact of furlough payments.
To qualify for an additional deduction on expenditure, the costs must meet the definition of “core”. That means that it must be spent on the activities involved in producing, deinstalling or closing the exhibition at a relevant venue, or on producing the concert or orchestra series, or on producing or closing the production.
As an employee on furlough must not perform any duties working for their employer, they cannot carry out the activities relating to the costs defined as core. Therefore, staffing costs related to those activities cannot be considered relevant expenditure and are not eligible for tax relief.
If a period during an employee’s furlough is taken as annual leave or recorded as sick leave then it is potentially eligible for relief as these are statutory requirements and considered by HMRC as a necessary cost of employing staff.
The Culture Recovery Fund
The CRF takes two routes to support the recovery of creative charities; the Grants Programme and Repayable Finance.
The Grants Programme was closed for applications on 4th September 2020 and provided grants from £50,000 to £3 million to cultural organisations that were financially stable before Coronavirus but are now at imminent risk of failure.
The Repayable Finance programme was closed for applications on 9th September 2020 and offered long-term loans of over £3 million to assist cultural organisations in returning to sustainable operations.
Other assistance
The Department for Digital, Culture, Media & Sport lists two funds currently open to applications.
The Culture Recovery Fund for Independent Cinemas in England is administered by the BFI and is open to applications until 30th October 2020. You can find out more at BFI.org.uk.
The ACE capital fund provides capital expenditure funding for existing Arts Council capital grant holders who can demonstrate a capital funding shortfall due to Coronavirus. It is open to applications until 10th September 2020 at artscouncil.org.uk.
Helping accountants help charities
Charitable compliance is an ever-present requirement and accountants who look after charitable companies need to save on costs associated with this vital part of supporting their clients. Why not book a free demo to see how we can help?
BTCSoftware’s Charity Compliance Solution gives accountants access to our award-winning Accounts Production and Corporation Tax software. It means that you save time and money, freeing you up to focus on helping your clients plan their charity’s recovery strategy.
You can find out more, or give us a call on 0345 241 5030. You can also email sales@btcsoftware.co.uk.
