The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:
It is always useful to consider the views of the higher courts on subjects where the issues are not clear cut. The separation of business activities has yielded a number of interesting and significant cases. To illustrate the challenges and attempt to give a balanced view this guidance note summarises two cases won by HMRC, and two cases won by the taxpayer. Three of these cases relate to circumstances where HMRC argued that only one business existed. The fourth case Essex t/a Essex Associates v Customs and Excise Comrs is one where HMRC directed that two businesses should be treated as a single entity for the purposes of VAT assessment. All links to cases are subscription sensitive.
Mrs Smith ran the catering part of the business, but the only payment she made to her husband towards the facilities she enjoyed was to provide free sandwiches to pub customers on a Thursday night. It was argued by the Smiths that this was her way of paying for the kitchen and equipment facilities that she enjoyed on the hotel premises.
However, HMRC successfully argued that no person in business would sublet such a large part of his premises or allow gas and electric supplies to be freely used in return for a weekly plate of sandwiches.
A married couple provided computer programming services via a partnership and computer hardware supplies via a limited company.
HMRC successfully argued that the lack
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