Amendment to the VAT refund scheme to include the S4C television channel
Published 21 July 2020
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Who is likely to be affected
This measure will only affect the Welsh language broadcaster S4C.
General description of the measure
This measure will amend the VAT refund scheme in section 33 of the Value Added Tax Act 1994 (Section 33) in order to include S4C as an eligible body. This will allow S4C to recover the VAT paid on purchases used to support its non-business activity of free to air public service broadcasting.
Policy objective
To give S4C parity of treatment with the public service broadcasters already included in Section 33.
Background to the measure
Section 33 provides for refunds to mainly local government bodies of the VAT they pay on purchases used to support their non-business activities. Section 33 also includes the BBC and the appointed news provider under section 280 of the Communications Act 2003. If these bodies were not included in Section 33, they would be unable to reclaim this VAT as normally VAT is only reclaimable on purchases used for taxable business purposes.
Like the BBC, S4C is a public service broadcaster funded almost wholly from the licence fee. Changes to its operating structure have resulted in VAT becoming a cost to S4C, and the Chancellor has agreed that this VAT should be refunded under Section 33. This will provide parity of treatment with the BBC. The government has not identified any other similar public services broadcasters substantially funded from the license fee.
S4C has cultural significance in Wales and there is a manifesto commitment to support Welsh institutions.
Detailed proposal
Operative date
1 April 2021.
Current law
Section 33(3) names bodies, or groups of bodies, entitled to refunds of VAT. Section 33(3)(i) mentions the BBC and section 33(3)(j) mentions the appointed news provider. Presently S4C falls into neither category.
Proposed revisions
The measure will amend Section 33(3)(i) to specifically mention S4C.
Summary of impacts
Exchequer impact (£ million)
| 2019 to 2020 | 2020 to 2021 | 2021 to 2022 | 2022 to 2023 | 2023 to 2024 | 2024 to 2025 |
|---|---|---|---|---|---|
| Empty | Empty | Empty | Empty | Empty | Empty |
The Exchequer impact of this measure is set out in the Office for Budget Responsibility’s Economic and Fiscal Outlook published alongside Budget 2020, see Table A.3: Costings not on the Treasury scorecard, Page 187.
Economic impact
This measure is not expected to have any significant economic impact.
Impact on individuals, households and families
There is expected to be no impact on individuals as this measure only affects S4C.
This measure will have no impact on family formation, stability or breakdown.
Equalities impacts
It is not anticipated that there will be impacts on groups sharing protected characteristics.
Impact on business including civil society organisations
This measure will impact S4C by allowing it to recover the VAT paid on purchases used to support its non-business activity of free to air public service broadcasting. One-off costs for S4C will include familiarisation with this change, although this is expected to be negligible as the business has recent experience of recovering VAT and submitting VAT returns. There are not expected to be any continuing costs.
Customer experience is expected to remain broadly the same as the change only alters processes by allowing previously irrecoverable VAT to be recovered.
There is expected to be no impact on civil society organisations.
Operational impact (£ million) (HMRC or other)
It is not anticipated that implementing this change will incur any additional costs or savings for HMRC.
Other impacts
No other impacts have been identified.
Monitoring and evaluation
The measure will be kept under review through communication with S4C.
Further advice
If you have any questions about this change, please contact David Webb on Telephone: 03000 585994 or email: David.webb@hmrc.gov.uk.