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In Silver Sea Properties (Leamington Spa) SARL v HMRC [2021] TC08284, the First Tier Tribunal (FTT) found that input VAT was largely irrecoverable on furniture, fixtures and equipment incorporated into a leased care home. Where input VAT was recoverable, their onward supply under the building’s lease was not part of a single composite supply and output VAT was due. 

A common arrangement seen in care home groups is where the development of new care homes is undertaken by a dedicated company, ‘PropCo’. Once development is completed, a lease is granted to a second company, OpCo, which then operates the care home.

The primary motive for these arrangements is that finance for the development is generally easier to obtain via PropCo.

HMRC raised an assessment of £96,000 covering both input and output VAT on the basis that:

PropCo Appealed to the FTT which largely agreed with HMRC, finding that:

Useful guides on this topic

Land & Property: Relevant residential & relevant charitable purpose
What are the VAT rules for land and property that is used for a relevant residential purpose or a relevant charitable purpose? What are the clawback provisions affecting a change of ownership or use?

Mixed supplies: Single or Multiple supply?
Is a mixed supply a single or multiple supply for VAT purposes? What tests and case law apply?

Land & Property VAT at a glance
A summary of VAT on common land and property transactions.

Land & Property VAT (Subscriber guide)
An outline of the VAT treatment of some of the more common supplies of land and property.

External link

Silver Sea Properties (Leamington Spa) SARL v HMRC [2021] TC08284


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