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Groundwork Cheshire v HMRC

In Groundwork Cheshire v HMRC (TC02407 – 20 December) a trust (G) arranged for a subsidiary company to provide certain environmental services and services relating to health and safety to local businesses. The recipients were not charged for these supplies as G obtained funding from the North-West Regional Development Agency and the European Regional Development Fund. HMRC issued a ruling that the supplies were outside the scope of VAT (so that G was not entitled to recover the related input tax). G appealed contending that the funding which it received should be treated as third-party consideration. The FTT accepted this contention and allowed the appeal holding on the evidence that ‘there is a direct link between the services provided to clients and the funding received’.

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