Matthew Donmall appeared successfully on behalf of His Majesty’s Revenue and Customs in an appeal before the Upper Tribunal Tax and Chancery Chamber about the recovery of residual input VAT tax incurred by Hippodrome Casino Ltd (‘HCL’) in its business at the iconic Hippodrome premises on Leicester Square, London.

Below, the First-tier Tribunal had concluded, against HMRC, that HCL’s means of apportioning input VAT on HCL’s overhead expenditure by reference to floorspace more accurately reflected the economic use of that expenditure than the standard turnover-based method of recovery. Under that method, the residual costs, much of which were premises costs, were allocated in proportion to the areas occupied by bars, restaurant, theatre and gaming.  HMRC successfully argued that the FtT had erred in law in failing to address the central point in HMRC’s case, namely that the floor space method was fundamentally flawed because it proceeded on the false premise the areas allocated under that method to ‘bars’, ‘restaurant’ and ‘entertainment’ were only used for the purposes of taxable supplies of hospitality and entertainment. In fact these areas were also used economically as important amenities for HCL’s exempt gaming business. Having found that the FtT erred in law as HMRC contended, the Upper Tribunal re-made the decision in HMRC’s favour, for the reasons HMRC contended.

The Upper Tribunal’s decision can be found here. Matthew Donmall was instructed by the General Counsel and Solicitor to His Majesty’s Revenue and Customs. HCL was represented by Andrew Hitchmough KC and Ronan Magee instructed by PricewaterhouseCoopers LLP.