An associated business of the appellant, Trans Wales Trails Ltd (TWT), claimed back input tax on building works which was disallowed as it was on the Flat Rate Scheme for small businesses and could not recover its input tax; this was disallowed by HMRC so the appellant partnership made a claim for the input tax instead. 

TWT was a horse riding holiday business and the partnership ran a farm. Some of the farm buildings were converted into holiday accommodation; customers of the riding school would hire it in the summer, and it was used for bed and breakfast during the winter. After the input tax claimed by TWT was disallowed, the farming partnership was advised to register for VAT by its accountants in order to recover the VAT on the building works. 

By way of a letter dated 28 September 2018, HMRC reduced the VAT claimed by the partnership