Victory for opera in battle with taxman (From Tewkesbury Admag)

Victory for opera in battle with taxman

A NORTH Cotswold opera house has won its legal battle against the Inland Revenue over an £80,000 tax bill.

But despite its victory, Longborough Festival Opera will still be out of pocket to the tune of £25,000 as a result of its appearance at a VAT Tribunal last year.

Mr Justice Lightman ruled in favour of Longborough Opera at the High Court last Friday after it appealed against the VAT tribunal ruling that it was not eligible for VAT exemption on ticket sales.

The Inland Revenue claimed that because opera founder Martin Graham had offered to underwrite any losses, he had a financial interest and therefore was not entitled to the "cultural purposes exemption" for VAT.

However, the judge agreed with all submissions provided by Longborough Festival Opera and allowed their appeal. He ruled that Longborough Festival Opera is eligible for exemption from VAT under an EC directive.

He said it was implicit in the LFO's constitution that it aims to provide cultural service and not make profits for its members and that Mr Graham's potential liability did not amount to such a financial interest as to disqualify the charity from VAT exemption.

Afterwards, a delighted Mr Graham, who founded LFO in 1992, welcomed the decision and criticised the Inland Revenue.

"It means we can get on with being an opera business. The whole thing is absolutely absurd; to think we spent all that trustees' time and money, for what?" he said.

"It was a madness. Mercifully the judge said, in effect, that this was nonsense.

"It tells me somebody has seen the light," added Mr Graham, whose festival opera will receive substantial High Court costs but is unable to claim its £25,000 legal costs from last year's tribunal appearance.

"It was annoying having to spend that money but now we have a clear run to think about our forthcoming season," said Mr Graham.

The landmark decision will come as a huge relief to charitable trusts throughout the UK, who could have been faced with huge claims for backdated VAT payments had Longborough lost its case.

The Inland Revenue has 28 days to appeal against the judge's ruling.

Mr Graham said: "We could never have done this without huge support from our members and trustees and our team of lawyers."