Operation is commercial

The taxpayer company held a freehold of land with planning permission to build up to 575 holiday homes. Leases for 999 years were granted to customers buying plots and VAT was charged on the leases.

Customers then contracted with another company CBL to build the holiday homes. The taxpayer and CBL were owned by a single shareholder JMP. CBL treated its supplies as zero-rated.

HMRC raised a VAT assessment on the basis that the leases and build agreements were a single supply of completed holiday homes.

The taxpayer and CBL appealed.

The First-tier Tribunal dismissed the appeals on the grounds that the transactions were an abusive practice that needed to be redefined in accordance with the principles laid down in Halifax plc v CCE [2006] STC 919 although it did not agree with HMRC that the supplies should be treated as a single...