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Balhousie Holdings v HMRC

In Balhousie Holdings v HMRC [2019] CSIH 7 (7 February 2019) the Court of Session found that a sale which was followed by a leaseback was a disposal of an ‘entire interest’ for the purpose of VATA 1994 Sch 10 para 36(2) so that it was a deemed a standard rated supply. 

Balhousie operates care homes. The Huntly care home had been zero rated when supplied to Balhousie. Balhousie had then entered into a sale and leaseback transaction; and the issue was whether the sale had constituted the disposal of an ‘entire interest’ thus triggering VATA 1994 Sch 10 para 36(2).

The court observed that ‘residential property and care homes differ in two important respects from most other categories of zero-rated supply: the property acquired is normally of greater value and it remains in existence for many years. Those features give rise to a risk of...

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