In D Moulsdale t/a Moulsdale Properties v HMRC [2021] CSIH 29 (20 May 2021) the Court of Session decided (albeit not unanimously) that a taxpayer’s option to tax was not to be disapplied as there was no evidence that it had any intention or expectation that the land in question would become a capital item for the purposes of the capital goods scheme.
The appellant had sold offices over which it had applied an option to tax. VAT was not charged on the sale on the basis that anti-avoidance provisions in VATA 1994 Sch 10 paras 12 to 17 applied. These provisions (so the appellant argued) disapplied the option to tax thereby rendering its supply exempt from VAT. This put the taxpayer in the curious position of seeking to rely on anti-avoidance measures in order to avoid accounting for VAT.
HMRC disagreed with the position taken by the appellant and argued that the anti-avoidance provisions did not apply. Consequently the appellant ought to have accounted for VAT on the sale of the offices. HMRC...
