Share this content
tigers in zoo

Production needed to show it had paying audiences


In a rare tribunal test of Theatre Tax Relief, the taxpayer failed to prove the production had a commercial purpose, and so lost the case.

8th Mar 2022
Share this content

Theatre Tax Relief provides additional tax relief to a theatrical production company for eligible costs of producing a theatrical production. As would be expected with a generous tax relief there are several conditions that must be met before the company can be eligible for the relief. 

In the case of SGA Productions Ltd vs HMRC (TC08397) the tribunal was required to consider just one of these conditions – the commercial purpose (s1217GA CTA 2009). 

Commercial purpose 

The commercial purpose condition is that, at the beginning of the production phase, the company intends that all, or a high proportion of, the live performances that it proposes to run will be:

(a) to paying members of the general public, or

(b) provided for educational purposes.

SGA Productions Ltd is a specialist events production company that had contracted to provide various live performance shows at the Legoland Windsor Resort site and at ZSL Whipsnade Zoo. It was agreed by the parties to the hearing that each show produced by SGA at those locations constituted a “theatrical production” within the conditions of the legislation.

To pay or not to pay?

It was not necessary to pay for entry specifically to the relevant performances produced by SGA, but admission to both the Legoland Windsor Resort site and to ZSL Whipsnade Zoo required the purchase of a ticket that included access to those performances (among other things). The company’s argument was that the ticket price customers were required to pay to enter either venue represented a composite fee that also enabled them to watch the theatrical productions taking place within the sites. Those customers who watch the live shows are, therefore, paying members of the general public.

Free performance?

HMRC contended that customers buying an entrance ticket are paying to use all of the facilities and attractions within, but that the ticket price is not capable of being apportioned and so the performances are not to paying members of the public.

FTT decision

In her decision, the tribunal judge pointed out that it was necessary to apply the ordinary principles of statutory construction when interpreting the commercial purpose condition. 

In her opinion, the natural and ordinary meaning of “paying members of the general public” in the context of this relief, should be understood as meaning that the relevant members of the public have made a payment that is referable specifically to the relevant theatrical production. The payment has to be specifically for the purpose of accessing the performance, which was not the case with SGA’s productions. 

Her decision was that the production did not, therefore, meet the commercial purpose condition. 

Poor preparation

I feel compelled to observe that the company in this case does not appear to have prepared well for this hearing. I have no way of knowing what advice they sought or received but it seems from the judge’s comments that the evidence available to her was not of great quality. 

There was reference to the fact that there was no witness evidence and that, in addition to documents, the company provided links to three websites (Legoland Windsor Resort, ZSL Whipsnade Zoo and another unnamed site). Unfortunately, it seems these links were to the relevant home page, rather than to the specific information considered relevant for the appeal. 

The judge seems to have made an attempt to identify the relevant information, but she pointed out that it is not the tribunal’s role to undertake its own research to identify facts that may be relevant to an appeal. It is incumbent on the appellant to provide the evidence they are relying on.

It is easy to criticise, but if you are going to tribunal, why not prepare properly?

Replies (2)

Please login or register to join the discussion.

By Paul Crowley
09th Mar 2022 22:01

Read this in Taxation tax cases
Agree that poor presentation scuppered it

They really should have aimed at education rather than paying viewers
The links to home pages was worse than just not bothering at all. It just antagonised the tribunal
Here you are, figure it out yourself

Thanks (0)
By Graham Suggett
14th Mar 2022 10:42

It's a shame the company presented their case so poorly. It would have been interesting to hear the judge's consideration of the legislation as to whether a production was separable from other activities available under the single ticket price.

HMRC are obviously keen to avoid future challenges though - see the recent changes to the legislation:

Thanks (0)