The Supreme Court in Frank A Smart Ltd & Son distilled the existing CJEU case law to provide clarity on VAT deductibility for those undertaking fund-raising activities. Helpfully, it appears that the receipt of outside the scope of VAT income for a business is not fatal to VAT deductibility, provided it can be demonstrated that the costs incurred in relation to the outside the scope income forms part of either the overheads of the business or ongoing taxable transactions. Despite this helpful analysis of the case law, there is little doubt that the judgment itself will be analysed by the courts in the future as to exactly how it should be applied to a wide variety of cases on input tax recovery.
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The Supreme Court in Frank A Smart Ltd & Son distilled the existing CJEU case law to provide clarity on VAT deductibility for those undertaking fund-raising activities. Helpfully, it appears that the receipt of outside the scope of VAT income for a business is not fatal to VAT deductibility, provided it can be demonstrated that the costs incurred in relation to the outside the scope income forms part of either the overheads of the business or ongoing taxable transactions. Despite this helpful analysis of the case law, there is little doubt that the judgment itself will be analysed by the courts in the future as to exactly how it should be applied to a wide variety of cases on input tax recovery.
If you are not a subscriber, subscribe now to read this content.
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