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In Maddison and Ben Firth T/A Church Farm v HMRC [2022] TC08496, the First Tier Tribunal (FTT) dismissed the appellants' claim for input VAT for two luxury cars, a private number plate and pilates clothing on the basis that they were not allowable business expenditure for VAT purposes.

The FTT set out that it is the intention at the time of purchase that determines whether the vehicle is to be considered exclusively for business use. It concluded that there was not sufficient evidence to prove a business-only intention on  purchasing the vehicles. This was based on:

The FTT also found that:

All items for which input VAT was claimed were rejected for not being business expenditure and the appeal was dismissed.

The FTT noted that the appellants had taken advice from their accountant before making the claims, but did not follow it. On that basis the taxpayers were extremely lucky to avoid being charged tax penalties for negligence.

Useful guides on this topic

Cars & Vans: VAT
What is a car for VAT? What is a van for VAT? What VAT can be recovered on a car that is bought? Leased? What about fuel? Or mileage reimbursements? 

Clothing and work wear
Is tax relief available on clothing bought for work? When might clothing costs be disallowed? What needs to be considered?

Input VAT: What constitutes a valid claim (& VAT invoice)? 
What is Input VAT? Who can claim it? What is needed for a valid claim? What needs to be included on a VAT invoice and can you make a claim without one? 

Appeals: VAT
The process of making a VAT appeal largely follows that of direct taxes, however, there are some differences. How do I appeal an HMRC decision?  How do I appeal a penalty?  How can I request a Statutory Review? 

External link

Maddison and Ben Firth T/A Church Farm v HMRC [2022] TC08496


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