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Output tax on supplies of restaurant and entertainment by a college

The taxpayer ran courses in catering and performing arts. It had a restaurant in which all the catering functions were carried out by students to enable them to learn the skills in a practical environment. The public could eat in the restaurant and were charged about 80% of the cost of the meal. Similarly performing arts students staged shows in the college which the public could attend.

The college claimed a repayment of output tax for the supplies of restaurant and entertainment services on the basis that they were covered by the education exemption in VATA 1994  Sch 9 group 6 (pursuant to article 132(1)(i) of the Principal VAT Directive). HMRC disagreed saying the supplies should be standard rated.

The First-tier Tribunal held that they were exempt and the Upper Tribunal (Tax and Chancery Chamber) upheld that...