Insufficient business connection

The taxpayer bought ten acres of land which included a lake that he dredged improved and then opened to anglers on a day-permit basis. There were no other buildings on the land apart from a storage container at the entrance.

He applied four years later for planning permission to build a house on the site. Work began in July 2009 and he occupied the finished property in August 2010. The planning permission had included a condition that the house be occupied by a person employed by the angling business.

The taxpayer claimed for a VAT refund via the DIY scheme under VATA 1994 s 35. HMRC refused saying the property was built in the course of the business and therefore ineligible.

The taxpayer appealed.

The First-tier Tribunal did not agree with the Revenue. The condition in the planning permission that the occupant had...