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Folkestone Harbour (GP) Ltd (TC4306)
The taxpayer company paid for the construction of a fountain in the pavement at the entrance of the regenerated seafront in Folkestone.
The firm claimed the input VAT on the cost, which HMRC disallowed on the ground the fountain did not have a business purpose.
The company appealed, saying the fountain was an “important part of the development” and acted to mark the “front door” of the new seafront.
The First-tier Tribunal said it was clear from the plans that the site should include a fountain that would contribute to the “commercial attractiveness of the development of the site as a whole”.
The developers obviously believed the fountain to be an essential part of the project; there was a nexus between it and the seafront regeneration.
The taxpayer’s appeal was allowed.
