Too late for group treatment

The taxpayer company owned a property it let out with no VAT charged on the rent. An associated company P carried out property management services for which the taxpayer paid £106 000 in 2008/09.

The taxpayer claimed the input VAT on the fee. HMRC refused the claim on the basis it was attributable to exempt rental activities. The department also assessed the business to VAT that had been deducted as input tax in the previous three years and deregistered the company because it was not making taxable supplies.

The taxpayer appealed.

The First-tier Tribunal asked why a group election had not been made to cover the taxpayer and P.

The election was held March 2012 with...