Sale of land or partly constructed dwelling

The taxpayer Honeygarth was incorporated to enable the approval of a full planning permission application and to start construction after W obtained outline planning permission to develop affordable housing on land he owned.

Eventually the land was sold to a developer. The site had been prepared before the sale although no bricks were laid. W said the land was sold to Honeygarth immediately before the sale to the developer but HMRC disputed this. It said the transaction was between W and the developer. So the issue was whether the company could claim input tax incurred on the costs linked to a sale of land.

The First-tier Tribunal said the company could provide no evidence that it had ever owned the land. W and his wife sold it directly to a developer. Even if the company had owned the land and sold it to the developer – as...