Royal Opera House in Covent Garden loses £500,000 battle over tax

The Royal Opera House
PA

The Royal Opera House has lost a lengthy legal battle over the recovery of more than £500,000 from the tax authorities.

The world-famous Covent Garden venue has been locked in a long-running dispute with HM Revenue and Customs over VAT from 2011 and 2012.

Opera bosses believed they could deduct £532,069 in tax from spending on catering supplies, including champagne and food for the venue’s restaurants and bars.

But in a Court of Appeal ruling, judges found the opera house had over-extended the link between the cost of its productions – which enjoy tax exemptions – and the catering supplies.

“The Royal Opera House (ROH) stages ballet and opera performances in its main auditorium, which has 2,204 seats”, said Lord Justice David Richards, explaining the case. “Its productions are ‘highly acclaimed’ and they are the ‘central draw’ or the ‘core” of its commercial proposition.

“There are extensive catering facilities, particularly as a result of extensive modernisation following the acquisition of the adjacent Floral Hall in the 1990s, providing a new dining area, a balcony restaurant and a champagne bar.

“In addition, there is the Amphitheatre Restaurant and Bar at the top level of the theatre, the Crush Room for dining and the Conservatory Bar at the Grand Tier level for drinks and bar snacks and a bar adjacent to the studio theatre at a lower level.”

The judge said the opera house can cater for up to 365 diners, with tables and catering options booked after tickets are sold.

“Once booked, a table is made available for the entire evening until the end of the last interval (there are normally two intervals of about 25 minutes each) and most customers spread their dining over the period before the start of the performance and during the intervals”, he said.

A trip to the Royal Opera House is a “fully integrated visitor experience”, the court heard, setting it apart from West End theatres which often only have a “cramped bar” and ice cream for punters.

The Royal Opera House Covent Garden Commission, a charity, argued there is a “direct and immediate link” between production costs and catering supplies, as the staging of “high-quality productions promotes the catering, which in turn provides financial support for the productions”.

But HMRC disagreed, saying the link was not direct enough to qualify for a tax exemption.

The opera house won its case in the initial tribunal but lost on appeal, and the Court of Appeal judges have now dismissed its challenge to that decision.