In TJ Charters v HMRC [2014] UKFTT 896 (16 September 2014) the FTT reviewed the way HMRC had apportioned input tax incurred on the acquisition of a yacht used for both business and private purposes.
The appellant had purchased a yacht for the dual purpose of running a chartering business and personal use. The issue was whether the so-called Lennartz method of accounting for output tax was appropriate. In Lennartz [1995] STC 514 the CJEU had held that a taxable person is entitled to recover input tax incurred on the purchase of goods however small the proportion of business use of such goods.
The yacht had quickly become a ‘white elephant’. The chartering market had been badly affected by the recession and for various reasons the appellant and his wife had not been able to use it for leisure purposes.
The appellant contended that the...
