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Hills and another v CRC, Upper Tribunal (Tax and Chancery Chamber), 25 April 2016
Requirement to obtain prior permission for the option to tax
In March 2004 the trustee of a self-invested personal pension (SIPP) bought a property which it leased to two dentists to run their practice. In August 2010 the trustee belatedly notified HMRC that it had opted to tax the property from 14 April 2004. The date was amended to 30 March 2004 and the department accepted the late notification.
In December 2011 the trustee sold the property to the taxpayers. They argued that the option to tax was invalid because the trustee had not obtained prior permission (VATA 1994 Sch 10 para 3(9)) from HMRC before it could be exercised.
The First-tier Tribunal found for HMRC so the taxpayers appealed to the Upper Tribunal.
The Upper Tribunal said that the purpose of para 3(9) was that it should apply to exempt supplies made or intended...
