09 December 2022

Ashtons Legal v HMRC

The FTT released its decision on 15 November 2022, allowing the appeal of the appellant partnership, Ashtons Legal.

The FTT found that, applying the binding authority in Airtours Holiday Transport Ltd v Revenue and Customs [2016] UKSC 21 and taking an objective view of the economic and commercial reality, the appellant partnership was the recipient for VAT purposes of a taxable supply of goods by virtue of leases for which it had made payment.  This was so notwithstanding that a third party was named as the tenant on the leases, since the third party acted as a mere cipher and had been inserted into the leases in the particular circumstances to deal with certain provisions of the Law of Property Act 1925.  HMRC’s argument, focusing on the form of the leases and asserting that the appellant partnership acted only as a guarantor, was rejected.

As the appellant partnership used the leases for the purposes of the business that it carried on, the FTT held that the VAT charged on the rent was input tax of the appellant partnership and recoverable as such.

Zizhen Yang acted for the Appellant

To view the decision click here