Is the VAT tribunal’s decision in the case of Water Property Ltd a ‘rogue’ decision? The case concerned the acquisition of a property by a company and the subsequent refurbishment of that property in separate phases. HMRC considered that the acquisition cost and the refurbishment costs should have been aggregated, resulting in the property falling within the capital goods scheme. As such, it then considered that the developer’s option to tax should be disapplied under the anti-avoidance provisions of VATA 1994 Sch 10. The tribunal found that the property was not a capital item and in any event, as there was no abuse, HMRC could not disapply the option to tax.
