Leading festival promoters, production companies, venue operators and industry associations have called on the Government to maintain the 12.5% reduced VAT rate on tickets until at least the end of 2022.
A temporary reduced VAT rate of 5% was announced on 8 July 2020 and was applied from 15 July 2020 to 30 September 2021. A reduced 12.5% rate has been in place since 1 October 2021 but is due to end on 31 March.
UK Music chief executive Jamie Njoku-Goodwin said it is crucial for the live sector that the VAT rise is cancelled: “Our industry has been hammered over the past 22 months and still faces huge levels of uncertainty – the last thing we need now is a tax hike. We want to play a positive role in the wider economic recovery, but raising VAT on our sector is not the way to do that – we should be cutting VAT to support what is still a fragile recovery, not increasing it.”
Isle of Wight Festival (cap. 55,000) promoter John Giddings (pictured) agreed: “Our costs are rocketing, and we cannot charge more for tickets. Many shows still have 2020 ticket prices, when there was no virus or need to pay for protection against it.”
Standon Calling (17,000) festival owner Alex Trenchard said the impact of the Omicron wave makes for a strong argument to reintroduce the 5% VAT rate: “Omicron is creating massive labour shortages and the emergency rate will help us with inflationary cost pressures that upset a business model based on fine margins.
“Looking beyond Omicron there is also strong case for a permanent cultural VAT rate for festivals as elsewhere in Europe – this is critical to the festival industry’s recovery as we hopefully emerge from Covid in 2022. We are entering inflationary times and rising costs are not going to go away. A cultural VAT rate would support our £1.76bn sector and also ensure a level playing field with European festivals who have a competitive VAT advantage that allows them to outbid UK festivals for talent. In the long run this can only lead to a cultural talent drain out of the UK.
Geoff Ellis, CEO of Scotland’s DF Concerts, whose events include the 50,000-capacity TRNSMT festival, also called for a cut rather than a rise in the current VAT rate: “March 2022 is now definitely not an appropriate time to stop the VAT relief.”
Vision Nine festivals director Kevin Moore, who oversees festivals including Boardmasters (50,000) and NASS (15,000), said a delay to the rise in VAT on tickets would be of huge benefit to the festival sector: “Prices of kit aren’t coming down anytime soon and there is only so much cost that can be passed onto the consumer. For the 2022 season at least, an extension of the VAT window could provide a lifeline for some festivals.”
NOEA CEO Susan Tanner said, “There is still a lot of demand for tickets, so organisers who do not drop their sale price can benefit from another 7.5% turnover per ticket. If they are able to use this additional profit to rescue their businesses but also invest in higher qualities of staffing and supply chain, we’ll be able to make great progress this year.”
National Arenas Association chair and Royal Albert Hall artistic director Lucy Noble said, “The reduced VAT rate period should absolutely be extended – our industry has been hit significantly during the last two years. We need as much financial support as possible as we enter this recovery stage.”
Nick Morgan, CEO at production company We Are The Fair said, “No one had shows in 2019 and many didn’t in 2020, so I definitely feel the planned [VAT] rise should be paused to simply allow shows the best chance of recouping the huge, huge losses from non-trade for nearly 24 months.”