Tribunal shuts down Hippodrome’s VAT recovery bid – Daily Business

London’s Hippodrome Casino has lost its latest bid to recover more input VAT, after a tribunal backed HMRC’s stance on how the venue should apportion costs between taxable sales (bars, restaurants, theatre) and exempt gambling activity. The heart of the dispute is simple: can a bespoke calculation beat the standard turnover-based method for splitting “residual” overheads? The tribunal said no, denying Hippodrome the uplift it hoped to secure. 

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 Why this matters goes beyond one theatre-district landmark. Land-based operators with mixed supplies live under partial exemption rules: some activities generate taxable income; core gambling is VAT-exempt. Overheads—marketing, utilities, security, cleaning—serve both sides, so the recovery percentage depends on an allocation method. The default is turnover. To override it, a casino has to show that an alternative split better reflects real economic use, with evidence that stands up under scrutiny. 

Hippodrome argued for a more tailored approach, but the tribunal stuck to orthodoxy. That leaves the venue, and peers in similar positions, with tighter recovery on overhead VAT tied to hospitality and entertainment footprints. The message to finance teams is unambiguous: if you want to replace the standard method, bring a model that is not just intuitive but measurably better—and be ready to prove it with data that links costs to specific revenue streams over time. For anyone tracing the legal reasoning, the official Upper Tribunal judgment lays out why a standard method override sets such a high bar and how the court evaluates proposed proxies for economic use. 

Zooming out, this is a narrow UK tax story with limited spillover to remote operators. Many online casinos that serve British players are incorporated and licensed outside the UK—Malta is a common hub—and follow different VAT, establishment, and licensing frameworks. Their place-of-supply, input tax rules, and compliance obligations diverge meaningfully from a West End venue’s partial exemption calculation. In other words, a ruling about a bricks-and-mortar cost split in Leicester Square doesn’t automatically ripple through to offshore, remote-first platforms. 

Investors and operators might still draw two practical lessons. First, HMRC guidance remains the playbook unless and until a taxpayer proves a more accurate method; creative allocations without hard usage evidence won’t clear the bar. Second, documentation discipline matters: time apportionment, staff allocation logs, cost-centre tagging, and activity-based analyses give a bespoke model its only real chance in court. For a clear, practitioner-friendly recap, Bloomberg Tax’s coverage of the Hippodrome appeal summarises the path the case has taken and the evidential standards that will govern similar disputes. 

Bottom line: this is not a rewrite of UK VAT for gambling; it’s a firm nod toward the standard approach. Land-based casinos with mixed supplies will likely remain inside the turnover method unless they can demonstrate something demonstrably more precise. Remote operators based offshore will keep navigating their own licensing and tax lanes—and most won’t feel a ripple from a case centred on a physical casino’s overhead allocation.