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HMRC internal manual

VAT Cultural Services

Cultural bodies with local authority councillors as trustees: Trustees / Councillors who are paid a special responsibility allowance by the local authority

Some authorities pay a special responsibility allowance to their representatives on the board of a cultural body, rather than build an element into the basic allowance that all members receive irrespective of their specific duties. Under guidance provided by the Department for Communities & Local Government, such allowances can only be paid where a councillor has significant additional responsibility over and above the generally accepted duties as councillor. They can particularly apply where the Council’s representative chairs the Board of a large organisation, needing a significant time commitment on a par with the chairman of a commercial organisation.

As the allowance recognises both time commitment and responsibility levels and is based on commercial rates, we have accepted that the payment of such an allowance, where it relates to the Councillor’s duties as cultural body trustee, will disqualify a cultural body from exemption in that it would not meet the criteria at Note (2) (c) to Group 13, Schedule 9 of the VAT Act 1994.