VIT64150 - Legal history: cases about domestic accommodation
Cupit (W) & Sons VTD 5403
Eccles (ACS) & Co VTD 2057
FJ Meaden Ltd VTD 13215
Greig (WJ & L) & Son VTD 2918
Sangster Group Ltd VTD 15544
Suregrove Ltd VTD 10740
Wright (RS & EM) Ltd VTD 12984
Please note that the following material is not a full summary of the case - it merely highlights the principle referred to in the appropriate section of this manual.
Cupit (W) & Sons VTD 5403
A family partnership ran a farm. It converted a barn into a house for one of the partners and his wife. »Ê¹ÚÌåÓýapp partnership argued that the purpose of the work was to allow the partner, who had suffered a stroke and could not walk far, to live close to the farm. HMRC argued that the costs had not been incurred for a business purpose.
»Ê¹ÚÌåÓýapp tribunal held that the conversion had a dual purpose. It also held that the business purpose was the dominant one and said that 70% of the tax on the barn conversion could be recovered.
Eccles (ACS) & Co VTD 2057
A family partnership ran a farm and restored an old cottage. At first one of the partners lived in the cottage but later it was occupied by an employee. »Ê¹ÚÌåÓýapp tribunal held that 70% of the tax on the restoration was recoverable.
FJ Meaden Ltd VTD 13215
A married couple had a farming company which owned a bungalow. »Ê¹ÚÌåÓýapp company renovated it so that the couple’s son, who was an employee of the company, could live in it. HMRC opposed the claim because we believed the son was ‘a person connected with a director of the companyâ€� as defined in VAT Act 1994 section 24(3).
»Ê¹ÚÌåÓýapp tribunal held that the cost of renovating the bungalow had a dual purpose. It held that 50% of the tax on the renovation could be recovered.
Greig (WJ & L) & Son VTD 2918
A business renovated and extended a cottage close to its main farmhouse. »Ê¹ÚÌåÓýapp tribunal allowed recovery of 70% of the input tax on the costs of renovation and extension.
Sangster Group Ltd VTD 15544
A company owned a large house that its chairman lived in. »Ê¹ÚÌåÓýapp house was also used for business meetings. »Ê¹ÚÌåÓýapp company wanted to recover input tax on the costs of refurbishing the ground floor of the house.
»Ê¹ÚÌåÓýapp tribunal observed that there was ‘a legitimate business element in this caseâ€� but that when the chairman stayed overnight ‘he was using the accommodation, including the ground floor, for domestic purposes.â€� »Ê¹ÚÌåÓýapp tribunal also said that ‘it would be unrealistic to treat every waking hour which the chairman spent at the house as devoted to business.â€�
»Ê¹ÚÌåÓýapp house had been used for business purposes for 64 days in the tax year when the refurbishment costs had been incurred. »Ê¹ÚÌåÓýapp tribunal therefore adopted HMRC’s allowance of 20% recovery on the costs ‘in an effort to be fair and reasonable, avoiding troublesome calculations.â€�
Suregrove Ltd VTD 10740
An oil consultancy company had its registered office in Surrey. It bought two weeks� timeshare accommodation about 40 miles from Aberdeen which it said was to be used for meetings with clients. HMRC considered that the timeshare had been bought as holiday accommodation for the company directors.
»Ê¹ÚÌåÓýapp tribunal held that the timeshare had been bought for a dual purpose and that 25% of the tax on its purchase was deductible.
Wright (RS & EM) Ltd VTD 12984
A farming company converted two derelict cottages into a farmhouse. »Ê¹ÚÌåÓýapp tribunal held that the farmhouse was primarily used as domestic accommodation for the company directors. However, a small part of the expenditure related to the conversion of a pigsty into an office and so 10% of the tax on the conversion of the cottages could be recovered.