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A partnership operated a residential care home from from 1980 to 1986, when the business was incorporated.
The partnership and the company registered for VAT in 2008, with effect from 1980 and 1986 respectively. Both submitted VAT returns and claimed input tax.
HMRC inspected the taxpayers’ records and reduced the claims to nil on the basis the output tax in each period had been greater than the corresponding input tax.
The department did not dispute that the input tax had been paid, but said tax would have been owed had the correct output tax been declared.
The First-tier Tribunal dismissed the taxpayers’ appeal.
The case went to the Upper Tribunal, which noted the Revenue had explained its reasons for not allowing the input tax claim and had agreed not to pursue tax due. The department was entitled to deal with the matter in this way.
The taxpayers’ appeal was dismissed.
