Too late

Low Profile Properties leased a number of shops for the taxpayer. Both companies were owned by S.

The rent invoices were addressed to Low Profile Properties which was not VAT-registered. In practice the taxpayer paid the rent and was responsible for the maintenance of the buildings.

The taxpayer claimed in its VAT returns the input tax in respect of the rent. HMRC refused the claim on the basis the leases were granted to Low Profile Properties which in effect sublet the properties to the taxpayer.

This was an exempt supply because Low Profile Properties had neither registered for VAT nor opted to tax. The landlords had no relationship with the taxpayer.

The First-tier Tribunal agreed with HMRC saying it could not give the right to deduct tax on the rents to the taxpayer because Low Profile Properties was not VAT-registered and had not opted to tax...