Commentary

RCB/45/07 VAT—partial exemption—VAT deduction by theatres on production costs

Part V16 Forms and other HMRC material

RCB/45/07 VAT—partial exemption—VAT deduction by theatres on production costs

RCB/45/07 VAT—partial exemption—VAT deduction by theatres on production costs

Revenue & Customs Brief, Issue 45. 18 June 2007

HMRC has revised its policy on input tax recovery on the costs of staging shows (production costs) for which the theatre's admissions are VAT exempt. It follows the judgment of the Court of Appeal in the case of Mayflower Theatre Trust Ltd ([2006] EWCA Civ 116) (MTT). It replaces the first article in Business Brief 12/06, which is now withdrawn. Further information on partial exemption can be found in Public Notice 706.

The dispute

MTT bought in performances (production services) under contract from touring companies. The supply of production services was a single supply for VAT purposes. HMRC maintained that none of the input tax was deductible because it related solely to supplies of exempt admission. MTT argued that the input tax was partly deductible (residual) because the

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