In HMRC v Royal Opera House Covent Garden Foundation, the Upper Tribunal held that there was no ‘direct and immediate’ link between the production costs of staging an opera and the taxable supplies of catering made by the appellant during performances. The mere fact that ‘but for’ the input cost in question taxable supplies would not have been made was not enough to establish the requisite ‘direct and immediate link’ between the input cost and the taxable supplies. As a result, none of the input tax incurred on production costs could be attributable to those taxable catering supplies.
