Britain’s largest and best-attended zoo has won a £1.3 million victory over the tax authorities after a tribunal ruled that it can set off against its overall VAT bills the tax it pays on the cost of keeping and maintaining its 8,000 animals and building and improving their habitats.
The charity which runs Chester Zoo argued that it should be entitled to reclaim VAT it pays in respect of animal-related costs by reference to its profitable restaurants, cafés and gift shop. HM Revenue and Customs, however, disagreed and issued the charity with VAT assessments stretching over a 10-year period.
In allowing the charity’s appeal, the First-tier Tribunal noted that, without the income from its catering and other sales, the zoo would make a loss in most years. Although the animals were the zoo’s ‘main event’, all its revenue streams were essential to its economic well-being. The animal-related costs thus had an immediate and direct link to the charity’s catering and retail supplies and the former were a cost component of the latter.