Library lease

Newnham College Cambridge built a new library in 2000. As an educational establishment Newnham made exempt supplies for VAT purposes and was concerned that it would not be credited with the input tax on the goods and services on which it had been charged VAT. Therefore it entered into a scheme whereby it acquired a shelf company. On completion of the library the college leased it to the company and assigned to it all the facilities and staff required to operate the library.

The college opted to tax the lease so that it would become a taxable supply and the college would be entitled to recover all the input tax on the cost of building the library.

The issue was whether the college as developer had remained in occupation of the land within the meaning of VATA 1994 Sch 10 para 3A(7). If...