Balhousie Holdings v HMRC

In Balhousie Holdings v HMRC [2016] UKFTT 377 (31 May 2016) the FTT found that a sale and leaseback did not trigger a change of use charge.

BH operated care homes and formed a VAT group with its subsidiaries including BC. One of BH’s subsidiaries FC was not part of the VAT group. In view of the difficulty of obtaining loan finance BC had entered into a sale and leaseback arrangement as a means of raising finance. Three properties had been sold to Target Healthcare REIT which had immediately granted leases back to BC. One of the properties which had been acquired by BC from FC had been a newly completed care home. This purchase by BC had been treated as a VAT zero-rated first grant of a major interest in a relevant residential property. HMRC considered that the onward sale and...