Dr John Herbert Smalley v Commissioners for Her Majesty's Revenue and Customs

Decision date: 23 February 2011

Neutral citation: [2011] UKFTT 134 (TC)

Overall AI summary confidence: high

AI Notice: Any short overview, ratio decidendi summary or obiter dicta summary shown on this page is AI-generated, provided only to help users assess potential relevance more quickly, and may be wholly inaccurate. No liability is accepted for the accuracy of any such summary, regardless of any AI confidence rating shown. Users should check the underlying decision and obtain appropriate legal advice rather than relying on any summary.

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

Dr Smalley appealed HMRC's amendment denying a VAT repayment claim of £1,649.04 (after excluding £2.60). The Tribunal found he was not carrying on a business for VAT purposes because the "Sunburst" arrangement did not amount to supplying for consideration or moving towards doing so, and alternatively held there was no real connection between the disputed expenses and any business purpose. The appeal was dismissed and HMRC's amendment to nil was upheld.

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: medium

For input tax to be allowable the claimant must be carrying on a business; activities without evidence of recurrent supplies or any real movement towards supplying for consideration do not qualify as a business for VAT purposes. Even if a business existed, input tax is recoverable only where there is a clear, direct nexus between the expenditure and the purpose of that business; a mere possibility that a business might benefit is insufficient and the taxpayer bears the burden of proving the business use.

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 observed that purported business-related expenditure (for example business phone calls) requires documentary evidence of business use to support an input tax claim, and that expenditure which is primarily personal or for trust administration (such as accountancy for a family trust) is not attributable as business input tax.

Warning

Text contains significant repetition and formatting artefacts; some passages are duplicated. Notes contain significant repetition and formatting artefacts; some passages may be duplicated.

Source links

Judgment page Judgment PDF Judgment XML