The Commissioners for HM Revenue and Customs v Royal Opera House Covent Garden Foundation
| Jurisdiction | UK Non-devolved |
| Judge | Mr Justice Morgan,Judge Herrington |
| Neutral Citation | [2020] UKUT 0132 (TCC),[2020] UKUT 0132 (TCC) |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Subject Matter | Tax,22 April 2020 |
| Date | 22 April 2020 |
| Published date | 22 April 2020 |
[2020] UKUT 0132 (TCC)
Appeal number:UT/2019/0094
VAT – Partial exemption - whether costs of staging productions have a direct and
immediate link to taxable supplies of catering and ice creams – no - appeal allowed
- Articles 1,168 &173 Principal VAT Directive - ss 24, 25 and 26 VATA 1994
UPPER TRIBUNAL
TAX AND CHANCERY CHAMBER
THE COMMISSIONERS FOR HER MAJESTY’S
REVENUE AND CUSTOMS
Appellants
- and -
ROYAL OPERA HOUSE COVENT GARDEN
FOUNDATION
Respondent
TRIBUNAL:
Mr Justice Morgan
Judge Timothy Herrington
Sitting in public at The Royal Courts of Justice, Rolls Building, London EC4A
1NL on 5-6 March 2020
Matthew Donmall, Counsel, instructed by the General Counsel and Solicitor to
HM Revenue and Customs, for the Appellants
Peter Mantle, Counsel, instructed by Crowe UK LLP, for the Respondent
© CROWN COPYRIGHT 2020
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DECISION
Introduction
1. This is an appeal from the decision of the First-tier Tribunal (Tax Chamber)
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(Judge John Brooks) (the “FTT”) released on 24 May 2019. By that decision (the
“Decision”) the FTT allowed the appeal in part of the taxpayer, the Royal Opera
House Covent Garden Foundation (the “ROH”), which is now the Respondent in the
Upper Tribunal to an appeal brought by HM Revenue and Customs (“HMRC”),
against certain findings of the FTT which remain in dispute following the issue of the
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Decision. The appeal to the FTT was against HMRC’s denial of a claim by the ROH
to recover VAT input tax associated with the cost of staging productions (the
“Production Costs”) at The Royal Opera House Covent Garden (the “Opera House”).
2. Although admission to the opera or ballet is an exempt supply for VAT
purposes by virtue of the provisions of Group 13 of Schedule 9 to the Value Added
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Tax Act 1994 (“VATA”) it is common ground that the ROH also makes a number of
taxable supplies such as programme sales and production specific commercial
sponsorship to which the Production Costs have a direct and immediate link. As a
result of that link, the ROH is able to recover a proportion of the input tax associated
with the Production Costs which is also attributable to the taxable supplies.
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3. In its appeal to the FTT, the ROH contended that there was a direct and
immediate link between the Production Costs and (i) the taxable catering supplies of
the ROH in its bars and restaurants (ii) sales of ice cream (iii) shop sales (iv)
commercial venue hire and (v) production work for other companies. The FTT
concluded that there was a direct and immediate link between the Production Costs
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and the first two of those items. It found no direct and immediate link between the
Production Costs and the other items, save for production specific commercial venue
hire and shop sales of recordings of ROH productions.
4. There is no appeal against the FTT’s findings in respect of items (iii), (iv) and
(v) detailed above. HMRC applied to the FTT for permission to appeal against the
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FTT’s findings in respect of items (i) and (ii) which was granted by Judge Brooks on
27 July 2019. Accordingly, we are only concerned on this appeal with the question as
to whether the FTT erred in law in finding that the Production Costs have a direct and
immediate link with items (i) and (ii), which we will henceforth refer to as the
“Catering Supplies”.
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Relevant legislation
5. Article 1 of the Principal VAT Directive ("PVD"), EU Directive 2006/112/EC
sets out the basic principle that VAT is charged on the basis of the value added to the
various cost components of the supply. It provides insofar as material as follows:
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