London’s Hippodrome Casino takes HMRC to court
The popular casino in the heart of Leicester Square is at court today, seeking to overturn an ‘unusual’ ruling in a case over which method to use for the recovery of residual input tax.
The Hippodrome Casino offers customers a casino, along with restaurants, bars and a theatre, where Magic Mike Live has been showing since 2018.
While most people who attended the Hippodrome came for the gaming, a significant number came to the Leicester Square hub just for its restaurants, bars, and theatre and did not enter the casino.
As a result, the venue’s owners submitted a VAT claim to HMRC, seeking the recovery of residual input tax. They requested the use of a floor space method, which distinguishes between taxable and exempt areas, rather than the standard measurement method.
The tax years 2012/13 to 2018/19 were the target of this challenge.
However, HMRC rejected the Hippodrome’s claim, stating the hospitality areas had a dual use as they were used to attract and retain customers for the casino.
Gambling on the courts
The tax agency asserted that the floor space method did not reflect the economic use of the input tax.
The case was brought to the First-Tier Tribunal, which sided with the West End business by agreeing that the floor space method provided “a more fair, reasonable and precise proxy” of its business.
The case then went to the Upper Tribunal, who, as the accountancy giant MHA noted, in an “unusual judgment,” ruled that the First-tier Tribunal had made a material error in law by failing to address the core issue of dual use, resulting in the setting aside of that decision.
The Hippodrome Casino is now seeking to overturn the Upper Tribunal’s ruling for Tuesday and Wednesday; this case is being heard by Lord Justice Newey, Lady Justice Asplin, and Lady Justice Whipple at the Court of Appeal.