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HMRC fails to follow its own guidance in pub conversion case

14 February 2017 / Neil Warren
Issue: 4587 / Categories: Comment & Analysis , consultation , HMRC powers , Land & property

Puzzling times


  • Pub converted into a nursery and residential flats.
  • Option to tax to claim input tax on nursery costs.
  • HMRC said the capital goods scheme applied.
  • Taxpayers should be able to rely on official guidance.

There is nothing that VAT anoraks such as myself like more than a good old property challenge. And when a project overlaps three or four different aspects of the VAT rules we like it even more. This was definitely the situation in the First-tier Tribunal case of Water Property Ltd (TC5450) which produced a win for the taxpayer.


Project background

Water Property Ltd registered for VAT in November 2013 and purchased the freehold of a pub The Coach House for £210 000 plus VAT. As with many pubs ...

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