Exempt services?

Output tax on supplies of restaurant and entertainment by a college

The college offered courses in catering and hospitality and in the 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 Art 132(1)(i) of the Principal VAT Directive). HMRC disagreed saying the supplies should be standard rated.

The First-tier Tribunal and Upper Tribunal decided in favour of the taxpayer so...