Kenthouse Properties Limited v The Commissioners for HMRC
Decision date: 25 July 2024
Neutral citation: [2024] UKFTT 703 (TC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
KPL claimed input VAT of £183,601.05 on purchase of a property, asserting an intention to make zero-rated supplies (first grants of major interests), but HMRC denied the credit. The Tribunal found KPL made mainly exempt short-term lettings, had not demonstrated a clear contemporaneous intention to make zero-rated supplies, and that estoppel/fairness arguments based on an HMRC email failed. KPL’s appeal was dismissed.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: high
A claimant seeking recovery of input VAT must show the input tax is attributable to taxable supplies; where only exempt supplies have in fact been made, the claimant must demonstrate a clear contemporaneous intention to make taxable (here, zero-rated) supplies—mere later assertions or inconsistent contemporaneous records do not suffice.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The Tribunal indicated that an HMRC officer’s informal email about VAT treatment, given in the context of considering the seller’s return, may not amount to an unequivocal representation capable of creating estoppel; and that a party cannot resurrect an argument (such as TOGC treatment) that, if accepted, would have negated an input VAT claim in the first place.