In HMRC v Royal Opera House Covent Garden Foundation [2020] UKUT 0132 (TCC), the Upper Tribunal (UT) rejected a claim for the input VAT attribution of opera production costs to the taxable supply of catering and ice-cream to visitors. There were two separate supplies and the supply of opera was not a direct cost component of the supply of catering.

  • The Royal Opera House Covent Garden Foundation 'ROH' made a claim to recover VAT input tax of £532,069 on staging productions in 2011-12.
  • Whilst admission to the opera or ballet is an exempt VAT supply of ‘cultural services’, the ROH makes a number of standard-rated supplies and it sought to reclaim Input VAT incurred on its stage production on the basis that there is a direct and immediate link between the stage and its other economic activities.
  • On its appeal to the First Tier Tribunal (FTT), the FTT decided that catering services were economically linked to the opera's production costs. They were part of the full visitor experience. The productions brought in the customers and the customers then purchased food and drink.
  • HMRC appealed that decision on the basis that the FTT had erred in law in respect of the direct attribution tests.

On appeal, the UT, which had the benefit of the judgment in the recent Supreme Court case of HMRC v Frank A Smart & Son Limited [2019] UKSC 39 which was released after the FTT’s decision in this case, found that:

  • That there were two separate supplies, which operated in parallel, to which the production costs were linked.
  • It is not enough to say that because the two activities are linked in economic terms their link is direct and immediate.
  • There is an indirect link to the supplies of champagne in that without the stage performances the champagne would not be served but that is an indirect link.
  • In no sense could it be said that the production costs are part of the costs of supplying the champagne and thus a direct and immediate link is precluded. Likewise with the supply of other catering and ice cream.

As the link between production and catering was indirect, none of the input VAT incurred on production costs could be attributed to the catering supplies.


VAT & Partial exemption
Making exempt and taxable supplies? How do you calculate the amount of input tax you can recover under the VAT partial exemption rules? What are the de minimis rules? A useful review of the rules and current case law.

FTT case write up: Royal Opera House Covent Garden Foundation v HMRC [2019] TC7157 

External links

HMRC v Royal Opera House Covent Garden Foundation [2020] UKUT 0132 (TCC)