Maddison Firth & Anor t/a Church Farm v The Commissioners for HMRC
Decision date: 26 May 2022
Neutral citation: [2022] UKFTT 169 (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
This First-tier Tribunal dismissed Maddison Firth & Anor t/a Church Farm's appeal against HMRC, upholding a Section 73 reduction disallowing input VAT of £28,374.14 claimed in October 2020 for two cars, a personalised number plate and clothing. The Tribunal found the cars were available for private use at acquisition (evidenced by "social, domestic and pleasure" cover and lack of effective contractual restraints), the number plate was not shown to be a genuine business expense, and the clothing did not qualify as allowable business clothing.
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 applied the exclusivity test for input VAT recovery and held that availability for private use at the time of acquisition defeats entitlement to input tax on cars; documentary indicia at purchase (notably SDP insurance cover and absence of effective sanctions against private use) are pivotal in assessing whether vehicles were acquired "exclusively for the purposes of the business."
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 judgment observes (obiter) that a private hire operator's licence alone does not establish entitlement to input VAT where insurance does not cover hire/reward carriage, and that removal of SDP cover after purchase does not retroactively cure a position where vehicles were available for private use at acquisition.