Partial Exemption Flashcards
What is the significance of the Abbey National case?
When a transferor sells his business as a TOGC, and the conditions set out in law are met, the supply of assets is neither a supply of goods or services and is outside the scope of VAT.
As a TOGC is not a supply for VAT purposes, associated input tax is residual.
The decision in Abbey National concluded that the transfer costs have a direct and immediate link solely to the part of the business transferred, so input tax incurred on these costs is solely attributable to that part of the business
e.g. taxable = recoverable, exempt = irrecoverable, both = residual
What is the significance of the Thexton training case?
Deposit interest is non business
What is the significance of the Inzo case?
Input tax was incurred on a report that related to the intention of making taxable supplies
The report said that the idea was not good and the company went into liquidation. Belgian tax authorities sought to recover the input tax on the basis that no supplies were ever made.
The CJEU held that as long as the original intention to make taxable supplies was genuine, the business was entitled to recover input tax and there was nothing to claw back
What is the significance of the Ghent Coal case?
A company incurred input tax on expenditure on land which it intended to use in its taxable business
The local authority required the land to be sold under a compulsory purchase procedure so it was never used for taxable purposes. The sale of land was exempt.
The Belgian authorities sought to claw back the input tax.
The CJEU held that the company retained the right to deduction. It had a genuine intention to use the inputs for taxable purposes and the intention ha not changed, it was frustrated by circumstances beyond its control
What is the significance of the Briarch case?
Reclaimed input tax in full on the basis that the properties concerned would be subject to taxable supplies but when the building work was completed, they were obliged to obtain temporary rental income on short leases which was an exempt supply.
Where goods or services are put to an interim use different to that originally intended, provided the original intention is retained, the input tax must be apportioned on a fair and reasonable basis.
What is the significance of the Tremerton case?
Input tax was incurred to redevelop a property but T failed to raise sufficient finance and then an exempt sale of the site was made.
The company argued that it could not meet its original intention due to the circumstances outside of its control.
Input tax was repayable under reg 108 as there was a sufficient link between the input tax recovered and the exempt supply made. It was not beyond their control.
What is the significance of the Beazer Holdings case?
The sale of shares was incidental to the main business activity.
