Live screenings not the same as attending theatre for VAT

In Derby Quad Limited v HMRC [2023] TC08972, the First Tier Tribunal (FTT) rejected Derby Quad’s argument that their live screenings of plays were the same as attending the performance in person. As a result, the entrance fee was standard-rated.

Derby Quad is an arts hub, housing an art gallery, visual and media spaces and a cinema.

• As part of its cinema offering, Derby Quad contracted with both NT Live and the RSC to screen live theatrical performances taking place elsewhere in the country.
• On the assumption that the screenings were supplies by an eligible body to a right of admission to a theatrical performance, no VAT was charged. These supplies are exempt under Item 2, Group 13, VATA 1994.
• It was agreed by all that the Quad was an eligible body. HMRC believed the screenings were not live performances and so standard rated and issued assessments.
• Derby Quad Appealed to the FTT.

The FTT found that:

• Up until a ruling by the CJEU in 2016, cinematic screenings were covered by the exemption. After the ruling, HMRC were able to specifically exclude these from the exemption.
• Repeated screenings of the live performance, taking place after the event, were cinematic screenings.
• The ‘always speaking’ doctrine regarding statutory interpretation as set out in News Corp UK & Ireland Ltd v HMRC [2023] UKSC 7 was used to establish whether the presence of the audience at the performance could be via connectivity or whether it needed to be in person. Accessibility was not required by the audience in this context.
• The real-time live screening was not a cinematic screening as the audience felt they were experiencing a live performance.
• Despite all of this, the doctrine had to be applied narrowly as place was essential to a live theatrical performance.
• Having the audience at the venue where the performance was taking place crucially allowed for audience/performer interaction. The FTT considered audience feedback to be critical for a theatrical performance.

The screenings were not theatrical performances and the appeal was dismissed.

Useful guides on this topic

Starting in business:VAT
One of the first decisions to make when starting in business is whether or not you should register for VAT.  Am I running a business for VAT purposes and if so, when do I register?

Appeals: VAT
How do I appeal a VAT penalty?  How can I request a Statutory Review? How do I appeal an HMRC decision?   

External link

Derby Quad Limited v HMRC [2023] TC08972