For some time now, HMRC has been pursuing a challenge to the zero rating of digital advertising supplied to charities by social media providers such as Google and Facebook. … Read more
We have put together a detailed insight to give you a summary of some of the basic UK Inheritance Tax and US Estate Tax rules, with basic planning for those that fall under both regimes. … Read more
Join us on Tuesday 25 February for our trustee training workshop to build understanding on how to apply digital in your charity's strategy. … Read more
130 Wood Street, London, EC2V 6DL
enquiries@buzzacott.co.uk T +44 (0)20 7556 1200
.jpg&w=520&h=520&crop-to-fit)
GSA also sought to argue there were two buildings rather than one and that the construction costs be attributed to each building, with full deduction for the opted building, having initially treated the input tax as residual. The First Tier Tribunal refused GSA’s appeal.
On appeal to the Upper Tribunal, the court found that whilst there was a supply in return for consideration applying principles established in Wakefield College, the rental did not constitute a business activity. The test for economic activity is whether a supply was made for “remuneration” i.e. for obtaining income on a continuing basis. The UT took the view that the renting of the building was primarily to facilitate GSA’s support for a student union, not to provide it with income from exploiting the property.
The FTT had found based on the facts that there was a single building and the UT said this finding should not be disturbed. In any event, the economic reality was that there was a single contract for the development of the whole site. A split of the services between the two buildings would be artificial. GSA’s attempt to retrospectively request separate invoices from the supplier did not allow for VAT recovery.
The decision highlights the importance of careful planning from the outset, and in particular ensuring that contracts and invoices reflect the economic and commercial reality of what is being supplied.
If you have a question about VAT, complete the form below and one of our experts will contact you.
