Summary
This case concerns whether the anti-avoidance provision contained in Para 12 of Schedule 10 VAT Act 1994, commonly known as the ‘disapplication of the option to tax’, applied, and if input tax claimed in respect of the cost of acquisition, conversion and refurbishment of premises may be deducted.
Background
Land and buildings formerly used as a public house were acquired in 2013 by Water Property Limited for £210,000 plus £37,500 VAT, subject to planning permission to convert the ground floor into a children's day care nursery and the upper floor into residential flats. The planning permission was granted on 25 March 2013.
Water Property Limited was a developer and investment company run by Mr Waters. Smiles Childcare Limited was established to carry on a business of the provision of nursery care for infant children. It
