Commentary

RCB/35/14 Lok'nStore Group PLC decision on calculating deductible VAT

Part V16 Forms and other HMRC material

RCB/35/14 Lok'nStore Group PLC decision on calculating deductible VAT

RCB/35/14 Lok'nStore Group PLC decision on calculating deductible VAT

Revenue & Customs Brief, Issue 35. 10 October 2014

Purpose of this brief

This brief sets out HM Revenue and Customs' (HMRC) position following the decision of the Upper Tribunal (UT) in Lok'nStore Group PLC (LnS). The case concerned whether the Partial Exemption Special Method (PESM) proposed by LnS produced a more fair and reasonable result for calculating deductible VAT on overheads than the standard method.

The UT dismissed HMRC's appeal on the grounds that it could not find that that the First Tier Tribunal (FTT) had erred in law in concluding that the PESM produced a more fair and reasonable result than the standard method.

HMRC is not appealing the decision, but does not intend to change its policy regarding floor space PESMs. HMRC does not consider that floor space methods are usually appropriate for the retail sector.

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