HMRC loses £1m VAT case against Scottish farmer

In a judgement issued on 29 July, the court said taxpayers can deduct VAT incurred in purchasing the rights to a subsidy, in this case entitlements to Single Farm Payments (SFPs).

HMRC had refused to allow the farmer, Frank A Smart & Son Ltd (FASL), to deduct VAT of £1,054,852 in its returns between December 2008 and June 2012, arguing that the subsidy was unrelated to the creation of non-exempt supplies. FASL appealed to the First Tier Tribunal (FTT) which ruled in its favour, finding that FASL intended when it purchased the entitlements to use the income from them to pay off its overdraft and develop the business. To read more – click here