VAT News

Was a business activity in existence?


A recent First Tier VAT case starts to add some insight into the view of what constitutes a business activity in the VAT context. Readers will be familiar with the recent changes in HMRC guidance on the business tests that will be used to support interpretation in this regard. Many may have thought that this was more an issue for the Not For Profit sector but this case report deals with an investment management company “Hedge Fund Investment Management Ltd”.

It focused on the evidence that existed on their “intention” to make taxable supplies in an environment where litigation overseas had delayed their initial plans and resulted in an assessment from HMRC to disallow the input tax they had recovered.

A successful appeal by the taxpayer resulted. As an aside, our old friend Nigel Popplewell sat as Tribunal Judge – such a small world.

VAT discussions on the nature of business activities will run on but whilst a First Tier case doesn’t create a precedent, they do give a sense of the direction of travel on the matter. As ever – get in touch if our expert insight would assist –


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