The recent decision of the First-Tier Tribunal in the case of Islington Driving Experience Limited v HMRC dealt with the extent of the reduced rate of VAT that was introduced for certain “entertainment” services during the COVID pandemic.  The legislation in question applied a reduced rate of VAT for a limited period to “supplies of a right of admission to shows, theatres, circuses, fairs, amusements parks, concerts, museums, zoos, cinemas, exhibitions and similar cultural events and facilities”.  

The appellant in this case offered members of the public the opportunity to drive a range of supercars at a number of off-road venues.  These services were provided at “race days”, where the customer could choose to drive the vehicles themselves or be driven by an experienced driver.

 The dispute between the parties centred on whether Islington was:

1. supplying the “right of admission”, and
2. If so, whether it was supplying that right to a “similar cultural event or facility”.

The Tribunal decided both points in favour of the taxpayer.  On the first point the Tribunal determined that the customer was paying for admission so that they could enjoy driving or being driven in a performance car, whereas on the second point the customers “collectively enjoyed” the event and thus the event was “similar” to the other cultural events/facilities listed in the law.

In light of the above, the taxpayer was able to benefit from the reduced rate of VAT in relation to the charges to participants in its race days.

This case appears to clarify some useful principles and any business involved in the operation of an “entertainment” venue or facility during the COVID pandemic and beyond (up until 31 March 2022) should contact our team to determine whether it is able to make a claim for a proportion of the VAT declared on its generated income during the relevant period. 

Call our free helpline on 0161 477 6600 or use our online contact form and find out how we can help with your VAT affairs.