All or some?

Apportionment of VAT on taxable and non-taxable supplies

The taxpayer ran car parks on private land. Its clients were the owners of the car parks. The taxpayer’s revenue was derived from parking permits but mainly from parking charge notices (PCNs) issued to motorists who were in breach of the rules for parking in the car parks.

The Court of Appeal ruled in a case concerning the same taxpayer  Vehicle Control Services v CRC [2013] STC 892 that PCN income was not liable to VAT. HMRC decided that since 8% of the taxpayer’s revenue was taxable consideration it could recover only that portion of the input tax claimed. The taxpayer said it was entitled to recover all of the VAT paid on its supplies. The First-tier Tribunal dismissed its appeal. The taxpayer appealed.

The Upper Tribunal said a taxable person who carried out transactions on which VAT is deductible...