The appellants business consists of the Folkestone Seafront redevelopment. The appellant argued that the fountain was an important part of the overall business strategy to ensure the commercial success of the redevelopment. The fountain was placed at the entrance of the development to mark the “front door” of the new Folkestone Seafront and to “place-make”.
HMRC stated that based on the facts and documentation made available to them they could not identify a nexus between the expenditure on the fountain and the planned redevelopment of the harbour. The appellant had failed to establish that the expenditure on the fountain was for the purposes of its business. Therefore the appellant had no right to recover input VAT.
The appellant argued that it had satisfied the business purpose test within Section 24(1) of VATA 1994 as there is an obvious and clear link between the fountain and its business of the
