University of Huddersfield VAT Case

By | 16th June 2017

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University of Huddersfield VAT Case

HMRC wins University of Huddersfield VAT case

Date: 9 October 2014

The Upper Tribunal has found in HMRC’s favour against the University of Huddersfield, which claimed £612,000 in VAT under a tax avoidance scheme in 1996, despite an earlier First-tier Tribunal ruling for the university. In that case, the university entered into a circular and self-cancelling lease and leaseback with a trust it had set up in order to reduce the VAT costs of refurbishing university property. The scheme deferred the VAT charge over the life of the leases, but it was intended to create an absolute saving by collapsing the leases early. The leases collapsed in 2004.

The Upper Tribunal found that the scheme was an artificial attempt to create a taxable supply for no other reason than to enable the university to claim VAT on its refurbishment costs. This case reinforces the ‘Halifax principle’, whereby an arrangement may be disregarded for VAT purposes if found to have been an abuse of rights. Jennie Granger, HMRC’s director general of enforcement and compliance, said: ‘This case offers further evidence that HMRC pursues those who avoid tax and won’t hesitate to litigate if a satisfactory settlement can’t be reached through discussion. The Upper Tribunal’s ruling also backs a key argument used by HMRC to tackle abusive VAT avoidance.’

The decision was released at the time of going to press, and will be reported in next week’s edition.

Issue: 1234
Categories: Indirect taxes, News, VAT