22 March 2022

Hippodrome Casino Ltd v HMRC; (FTT)

The First-tier Tribunal has released its decision in the case of Hippodrome Casino Ltd v HMRC.  The Hippodrome makes both taxable (sales of food, drink and theatre tickets) and non-taxable (gambling) supplies. It is therefore only entitled to recover so much of the overhead input VAT as is ‘used’ in making its taxable supplies. The legislation provides for a standard method based on the relative turnovers of the supplies made. However, the Hippodrome contended that its actual economic use of the overhead expenditure differed substantially from the attribution based on the standard method. The Hippodrome therefore applied the standard method override under reg 107B of the VAT Regulations 1995, and accounted for the difference between the standard method attribution and an attribution based on a floor space apportionment (with adjustments, notably to take account of the use of the taxable areas to make complimentary supplies) similar to that approved in London Clubs Management Ltd.  The FTT found that on the facts of this particular case, the floor space apportionment in issue did provide a more fair, reasonable and precise proxy of its economic use of its overhead expenditure than the turnover based standard method.

Andrew Hitchmough QC and Ronan Magee, instructed by PwC, appeared for the appellant Hippodrome.

To view the judgment, please click here.