In the Great Escape Game Limited v HMRC [2019] TC7375 the costs of the purchase and installation of themed escape rooms were found to be capital expenditure for the purposes of the VAT Flat Rate scheme.

  • Great Escape Game Limited (GAGL) operates escape room games whereby players are locked in a themed room and must navigate various puzzles and tasks in order to unlock the room and escape.
  • GAGL devises the different rooms and it works with another company Norse Sky who progresses the design and manufactures, supplies and installs the rooms into GAGL’s premises.
  • GAGL was operating the VAT Flat Rate Scheme, it claimed that its expenditure on the rooms was capital and as each room cost in excess of £2,000 reclaimed input VAT on the cost.
  • HMRC raised VAT assessments arguing that the supplies were the supply of design and installation of the themed rooms and therefore fall to be considered as a supply of services, the supply of the goods themselves being ancillary.

GAGL appealed to the First Tier Tribunal who found that:

  • The majority of the design work was carried out by GAGL. Norse Sky supplied and installed the Rooms,
  • The Rooms and the props are used as fixed assets to generate income on an ongoing basis. They are not consumed by GAGL or changed into anything else upon installation.

It held that the costs of rooms and props and their installations were single supplies of goods in excess of £2,000.

The FTT also considered other miscellaneous invoices charged by Norse Sky it found that these related to extra labour and joinery were supplies of services rather than supplies of goods.


Presumably the cost of these kind of Rooms will qualify for plant and machinery allowances too.

Our topical guides

VAT Flat Rate Scheme
What is the VAT Flat Rate Scheme (FRS)? Who can apply? How do you apply? What are the rules? What are the rules for capital expenditure and pre-registration VAT? 

Mixed supplies: single or multiple?
Is a mixed supply a single or multiple supply for VAT purposes? What tests and case law apply?

Place of supply of goods
What are the current rules that determine where the place of supply of goods is located?

External links

Great Escape Game Limited v HMRC [2019] TC7375