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HMRC v Frank A Smart & Son

In HMRC v Frank A Smart & Son [2019] UKSC 39 (29 July 2019) the Supreme Court found that input tax incurred on raising funds for the purpose of a farming business was recoverable.

Frank A Smart & Son (‘FASL’) was a Scottish company which carried on a farming business; it produced beef cattle and crops which were taxable. It had received units which entitled it to EU farm subsidies. As these units were tradeable it had spent about £7.7m on purchasing units in addition to its initial allocation with the assistance of bank funding. The issue was whether FASL could deduct the input tax incurred on purchasing the units.

The Supreme Court referred to the CJEU case law and in particular Abbey National (Case C-408/98) Kretztechnik (Case C-465/03) and Securenta (C-437/06) as authority for the proposition that a taxable person which acquires...

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