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Lai’s Ltd (TC3352)
The taxpayer was a restaurant company the controlling director of which developed an interest in powerboat racing buying a rigid inflatable boat (RIB) for about £10 000 in 2000.
He used the vessel recreationally and to take part in competitions. He bought a bigger more powerful boat for about £35 000 in 2006 and entered the world championships having obtained sponsorship.
The director bought a third boat from an American builder in 2010 for £297 991 – and the restaurant firm claimed input tax of £31 219 arguing the vessel would help obtain catering contracts for powerboat racing events.
HMRC said “a degree of sceptism” was necessary in deciding whether the subjective intention was to use the boat for business purposes. The department noted that no catering contracts had arisen.
The First-tier Tribunal accepted the assertion that owning and racing the powerboat might help obtain...
