Input tax on rental invoices

Mr Latifi traded as a bed and breakfast business at a property he rented from Oxford City Council. The council charged £8 750 plus VAT for quarterly rent of the premises and issued the invoices to Mr Latifi in accordance with the lease agreement.

He incorporated his business in November 2013 and traded as Star Services Oxford Ltd (SSOL) – the taxpayer - thereafter. However the lease continued to be in his name privately until it was amended in June 2018. Part of the premises were sublet to a coffee shop and a separate business called ‘Stitch’ which paid him personally rent of £600 a month and the coffee paid £7 500 plus VAT to SSOL.

HMRC disallowed the input tax claimed by SSOL on the basis that the supply of rent was from the council to Mr Latifi who was trading as a property rental business in...