Lords - ‘Give tax relief to historic West End theatres’

Published Wednesday 14 May 2008 at 12:05 by Lalayn Baluch

Deteriorating West End theatres should be given the same tax breaks as historic churches to prevent them from falling into disrepair and becoming financially unviable, say members of the House of Lords.

The suggestion was made by Baroness Gloria Hooper - and supported by other peers - during a parliamentary debate on entertainment facilities, led by composer and theatre owner Andrew Lloyd Webber.

The baroness called for listed theatres to receive the same low rate of VAT that is available to places of worship and to be allowed to claim back tax paid on refurbishment costs.

Tim Buss, VAT consultant for chartered accountants Goodman Jones, told The Stage that the peer’s recommendation was a viable option.

He explained: “The only way forward I can see is to lobby the government and get in place what we have at the moment for places of worship, where there is a low rate of VAT at 5%. On top of that there is a grant system, where churches are refunded the equivalent of VAT that they have paid to builders who have made repairs.

“If they combine that with a levy on theatre seats, then those two things together will probably work.”

During the debate, Lloyd Webber warned that carrying out modernisation work on listed sites was expensive and yielded no economic benefits for the owners. He said that to install air conditioning at the Grade I-listed Theatre Royal Drury Lane would cost £15 million, but if the building did not have historic status, the figure would be only £2 million.

He also raised concerns about the condition of the Palace Theatre and warned it was becoming “extremely unviable” to operate.

Meanwhile, another money-saving option proposed by the Lords is to use VAT receipts from theatre ticket sales to create a refurbishment fund.

It was also suggested that restoration projects be given the same tax relief available to new buildings. However, Buss explained that this proposal was a “non-starter” and pointed out that the government would be unable to implement such a change because it would contradict European law.

Theatres Trust director Mhora Samuel said: “Increasing VAT relief on refurbishment of protected buildings would really help owners to make the improvements needed.”

She added that the new Heritage Protection Bill would create partnerships between owners, local authorities and English Heritage, which would cut down on paperwork and make it easier for theatre managements to carry out routine improvements.

Earlier this year, an investigation called Restoration Drama, led by the London Assembly, suggested nine investment options to West End theatre owners, which included seeking VAT exemptions on building work, ticket levies and producer investment.

It warned that solutions proposed by the Theatres Trust in the 2003 Act Now report - which recommended that £250 million of investment was required over 15 years to modernise the oldest venues in the capital - were now “unworkable” and urged the Department for Culture, Media and Sport to re-establish the working group set up to secure investment for theatre buildings.

Of the 49 venues in London’s Theatreland, 40 are commercially owned. They are estimated to generate at least £1.5 billion per annum in total through theatregoers’ spending. However, most were built before 1937 and many are thought to be unsuitable for modern audiences.