In Royal Opera House Covent Garden Foundation v HMRC [2021] EWCA Civ 910 (17 June 2021) the Court of Appeal upheld the Upper Tribunal’s decision that there was no direct and immediate link between VAT incurred on production costs and taxable supplies of catering. Consequently the charity was not entitled to recover a proportion of that input tax under partial exemption principles.
The charity (ROH) staged ballet and opera performances in its main auditorium which were the ‘central draw’ of its commercial proposition. Sales of tickets for these performances were exempt from VAT. It also possessed extensive catering facilities where prior to (and during) performances customers could access restaurants and bars. The catering supplies were taxable. The liability of these income streams was not in question.
The dispute centred on whether VAT should be recoverable on any proportion of production costs. HMRC argued that the only direct and...
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