Lai’s Limited v HMRC

The past 50 years of VAT have provided us with some bright spots amid the encircling gloom not least in the voluminous case law related to input VAT reclaims. Generally these cases are fairly dry but the endless ingenuity of the taxpayer in finding a business purpose for what looks like private expenditure can make the facts engaging and some of the decisions surprising.

Of course very often the taxpayer’s adventurous refund claim is stopped in its tracks – but this doesn’t always happen. Some unusual VAT reclaims which have been successful at least in part include:

• The case of a novelist and screenwriter who purchased a fur coat before travelling to New York for a number of business meetings (R A Sisson LON/80/310).
• The case of a jazz musician who reclaimed VAT on a wig. The wig was apparently intended to uphold...