3D Crowd CIC v Revenue And Customs (Value Added Tax - input tax recovery) [2023] UKFTT 495 (TC) (12 June 2023)

3D Crowd CIC v Revenue And Customs (Value Added Tax - input tax recovery) [2023] UKFTT 495 (TC) (12 June 2023)

VAT incurred by 3D Crowd CIC on direct costs of BSI/CE accreditation was incurred solely for business purposes and is recoverable in full as input tax. VAT incurred on general overheads and PPE production was incurred partly for business purposes and partly for non-business (altruistic) purposes; such VAT must be apportioned under section 24(5) VATA. The inability to make taxable supplies does not preclude input tax recovery where there was a genuine intention to trade.

Citation
[2023] UKFTT 495 (TC)
Parties
Appellant: 3D Crowd CIC; Respondents: The Commissioners for His Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
12 June 2023
Procedural Posture
VAT Input Tax Recovery Appeal / First Tier Tribunal (tax) Substantive Judgment
Outcome
Appeal allowed in part
Legal Topics
Value Added Tax, Input Tax Recovery, Business Purpose Test, Apportionment of VAT, Intending Trader, Donations and Business Gifts
Tax Law Value Added Tax Input Tax Recovery Business Purpose Test Apportionment of VAT Intending Trader Donations and Business Gifts

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Parties

3D Crowd CIC

Appellant

The Commissioners for His Majesty’s Revenue and Customs

Respondents

Procedural Posture

VAT Input Tax Recovery Appeal / First Tier Tribunal (tax) Substantive Judgment

Legal Issues

  1. 1 Whether VAT incurred by 3D Crowd CIC on supplies made to it is recoverable as input tax under section 24(1) Value Added Tax Act 1994
  2. 2 Whether supplies made to 3D Crowd CIC were for the purposes of its business
  3. 3 Whether VAT incurred on donated PPE and related costs can be apportioned between business and non-business purposes

Ratio Decidendi

VAT incurred by 3D Crowd CIC on direct costs of BSI/CE accreditation was incurred solely for business purposes and is recoverable in full as input tax. VAT incurred on general overheads and PPE production was incurred partly for business purposes and partly for non-business (altruistic) purposes; such VAT must be apportioned under section 24(5) VATA. The inability to make taxable supplies does not preclude input tax recovery where there was a genuine intention to trade.

Court Disposition

Appeal allowed in part

Orders

  • VAT incurred on direct costs of BSI/CE accreditation to be allowed in full as input tax
  • VAT incurred on general overheads and PPE production to be apportioned between business and non-business purposes; parties to agree apportionment