Input tax claim allowed

Harewood Castle on the Harewood estate was substantially renovated with the help of a grant from English Heritage. It had been dangerously dilapidated: the aim was to make the building safe not to restore it.

On completion the edifice was to be used as an income-generating asset of the estate all of which would be subject to VAT. For example it could be rented for use by film and TV production companies as well as forming part of the attractions for visitors.

The estate claimed the input tax on the cost of the project.

HMRC said the intention was to rent the castle to a charitable trust as well as use it for other taxable purposes meaning the input tax on the renovation costs would be residual and only partly reclaimable as far as partial exemption was concerned because of the mixed...