Sarabande v The Commissioners for HMRC
Decision date: 30 January 2025
Neutral citation: [2025] UKFTT 93 (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
Sarabande (SB) appealed HMRC's disallowance of input VAT and a best‑judgment assessment which treated SB as having made an exempt supply of a licence to occupy land to its subsidiary SIL. The Tribunal found there was no transfer of a proprietary right of occupation to SIL, and on the balance of probabilities SB supplied the integrated "Accelerator Programme" directly to artists (a supply more than a passive letting). HMRC's disallowance and assessment based on an exempt supply to SIL were therefore invalid and the appeal was allowed in principle; the Tribunal did not quantify recoverable input tax.
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
The Tribunal treated the governing legal test as requiring a transfer of a right of occupation for an exempt supply of land to arise; absent a written proprietary disposition and any contractual right of occupation to the recipient, the Article 135(1)(l)/Schedule 9 exemption does not apply. VAT characterisation depends on the true legal relationships and contracts, not on inconsistent commercial assertions.
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 commented that commercial perceptions or post‑hoc statements by taxpayers or agents cannot displace the underlying legal documents and relationships when determining VAT character; it also recorded serious deficiencies in SB's record‑keeping and inconsistent information provided to HMRC, which complicated the audit but did not determine the legal outcome. The Tribunal noted questions about the commercial nature or subsidy of SB's activities but did not decide those issues.