London Drying Ltd v The Commissioners for HMRC
Decision date: 14 December 2022
Neutral citation: [2023] UKFTT 9 (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 appeal concerned whether London Drying Ltd was entitled to reclaim VAT on an Audi Q5 and whether a careless inaccuracy penalty was properly imposed. The Tribunal found that, at acquisition, the company intended to make the car available for private use (so input tax was disallowed) and upheld HMRC's careless inaccuracy penalty, but agreed to suspend that penalty for 12 months on three specified compliance conditions.
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 held that evidence that a vehicle was deliberately acquired without effective measures to prevent private use—including insurance terms permitting private use and acceptance that directors could use the vehicle personally—supports a finding that the taxpayer intended at purchase to make the vehicle available for private use and so is not entitled to input tax under Art.7(2G)(b).
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 decision reiterates the distinction between physical unavailability and legal/contractual restraints (citing Elm Milk) and emphasises a high evidential threshold on taxpayers to prove absence of intent to allow private use; it also indicates the Tribunal will not permit challenges to HMRC guidance content to override statutory and factual determinations.