VAT issues on opening a shop within a shop

The opening chapters of a post Covid-19 tale involving an imaginary high street clothes shop owned by Kate were the subject of my article ‘Retail therapy’ (Taxation 11 June 2020 page 18). She converted the first-floor storage area into an apartment and also rented out some ground floor space to a separate business called Snappy Shoes with a ‘shop-in-shop’ arrangement. She also developed her online sales using a website designed for her by an Indian business. It was a fast-moving journey in a short space of time. 

But there’s more: it is now April 2021 and Kate is shocked to learn that many nail bars and beauty salons have closed in her local town because of the virus. The closures have created a market gap she feels. Her online sales have done better than expected so she does not need all of the space in...