The Royal Opera House is a partially exempt trader who tried to make its overall input tax recovery including the costs of putting on productions attributable to the taxable supplies it makes. These are essentially catering and hospitality supplies made before and during productions. The Upper Tier Tribunal refused the link as they regarded the supply of the exempt production as the primary purpose of the opera House. Therefore, the production costs remained non-recoverable under partial exemption regulations.


For anybody operating a partial exemption method, expenditure must be correctly identified for the purposes of recovery of tax.