CA-2024-000806 - [2025] EWCA Civ 1259

Decision of the FtT

The FtT heard HCL’s appeals on 24-28 January 2022, giving its decision on 22 March 2022.

HMRC rejected HCL’s floorspace method on the basis, recorded at para 108 of the FtT’s decision, that there was “dual use” of the areas which were allocated to hospitality and entertainment. That was to argue that the hospitality and entertainment areas – bars, restaurant and theatre – should not be allocated solely to taxable supplies because the economic reality was that they were used for making both taxable (hospitality and entertainment) and exempt (gambling) supplies.

The FtT dismissed HMRC’s arguments, saying at para 125:

“For the reasons above, and having regard to all the circumstances, we have come to the conclusion that, given their extent and nature, the supplies of entertainment and hospitality from discrete and defined areas of the Hippodrome by HCL cannot be regarded as merely an adjunct to, or an amenity for, gaming.”

The FtT held that the floorspace method provided a “more fair, reasonable and precise proxy of [HCL’s] economic use of its overhead expenditure than the turnover based [standard] method” and allowed HCL’s appeals (para 127).