Too special

The taxpayer business wanted to adopt a special method for the calculation of its creditable input tax based on floor space allocated exclusively to taxable supplies exempt supplies mixed supplies and areas excluded from the calculation.

The result gave the taxpayer an 86% recovery of residual input tax compared with 36% under the turnover-based standard method. HMRC rejected the proposal and the business appealed.

The First-tier Tribunal said a successful appeal would have to show that the use of the floor space in the proposed method gave a more accurate determination of the recoverable input tax than the standard method.

The tribunal agreed with the Revenue the taxpayer’s proposed approach was less precise than the standard and said   “A special method that is predicated on floor space being a better measure than turnover for allocation of recoverable input tax – yet which takes...