Link between production costs and catering sales

The Royal Opera House was a charity so the income from ticket sales to shows was exempt from VAT. It also received taxable income from programme sales and sponsorship. These had a direct and immediate link with the costs of productions so the opera house was able to claim a proportion of the input tax associated with those costs. It claimed there was also a link with other income sources including catering and shop sales venue hire ice cream sales and income from doing work for other production companies. HMRC disagreed.

The First-tier Tribunal allowed the taxpayer’s appeal in relation catering and ice cream sales.

HMRC appealed.

After examining the case law including CRC v University of Cambridge (Case C-316/18) [2018] STC 848 Mayflower Theatre Trust v CRC [2007] STC 880 and Sveda UAB v VMI (Case C-126/14) [2016] STC 447 the Upper Tribunal decided the...