Supreme Court to deliver judgment in farm business VAT deduction case
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The Supreme Court will rule next week on an appeal from the Court of Session centred on whether a farm business is entitled to deduct the VAT it paid on the acquisitions of single farm payment entitlement (SFPE).
The respondent is a taxpaying company which carried on a farming business in Aberdeenshire. The respondent claimed repayment of VAT paid on its purchase of 34,477 units of single farm payment entitlement.
The units were issued by the Scottish Government in accordance with the European Union Single Farm Payment (SPF) scheme and were tradeable. The purchase of the units entitled taxpayers to obtain benefits under the scheme on fulfilling specified conditions.
The taxpayer’s claim to repayment of VAT was refused by HMRC. The taxpayer appealed to the First-tier Tribunal, who allowed the appeal, holding that the taxpayer’s intention as to the application of payments received on the purchased units, namely to develop its farming business, was critical and the evidence supported the necessary direct and immediate link between inputs and future taxable supplies. HMRC appealed unsuccessfully to the Upper Tribunal and to the Inner House of the Court of Session.
The Supreme Court will hand down judgment on the appeal on Monday 29 July at 10am.
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