- The distinction between business and non-business activities is a complex area of VAT.
- If an activity is deemed business-related, VAT on associated costs can be recovered.
- If an activity is deemed non-business, no VAT is required to be accounted for and no VAT on associated costs can be recovered.
- HMRC provided guidance in 2017 to help determine whether something is business or non-business.
- The Wakefield College case in 2018 refined the tests for determining business activity.
- The Court of Appeal stated that motive is irrelevant in determining business activity.
- HMRC’s Revenue & Customs Brief 10 (2022) seems to cement the refined two-stage test.
- Some HMRC officers are misinterpreting the Brief and considering motive and charging for something as indicators of business activity.
- HMRC’s approach contradicts published guidance and case law.
Source: haysmacintyre.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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