UK: Weekly Tax Update - Monday 26 August 2013

Last Updated: 2 September 2013
Article by Smith & Williamson


1.1 Draft guidance on DOTAS confidentiality hallmark

HMRC has published draft guidance to accompany the current consultation on the confidentiality hallmark. The guidance will be revised once the hallmark is final.


2.1 Validity of an information notice to verify a claim to non-residence

The First-tier Tribunal has determined that the conditions required for a valid notice to provide information to verify an individual's non-residence status were not met.

Kevin Betts submitted a tax return for the tax year ended 5 April 2009. The return showed that he had self-assessed his status for tax purposes as not resident and not ordinarily resident in the UK. HMRC purported to open an enquiry into the tax return.

The taxpayer's case on residence was that he had emigrated on 22 March 2008. He said he first went to Malaga for a short stay, and then moved to Gibraltar. He told HMRC that he had put his car and home on the market. He said however that he then rented out his former home, rather than selling it, due to the poor property market. He told HMRC that he owned another property in the UK which his daughter occupied.

HMRC sought a variety of information in the course of the purported enquiry. This information was provided, except that Mr Betts refused to supply bank, building society and credit card statements requested. In light of that refusal, HMRC gave formal notice seeking those documents. The notice was given under paragraph 1 of Schedule 36 and was dated 15 February 2012. It sought "Statements for all Bank/Building Society and credit card accounts operated between 22 March 2008 to 5 April 2009" inclusive.

When it first issued the notice, HMRC believed that it was giving it in the course of an enquiry and initially gave the notice in reliance on condition A of FA08 Sch36 para 21(4). It later accepted that the notice of an enquiry had not been given. However it did not withdraw the notice; instead it relied on FA08 Sch36 para 21(6), condition B, to justify it.

The tax year in relation to which the notice sought documents was 2008/09. But the notice also sought documents in relation to a short period (22 March to 5 April 2008) preceding that tax year. This was in light of Mr Betts's assertion that he had, by the start of that tax year, ceased to be resident in the UK. It was common ground that the relevance of that assertion was that the appellant's dividends from a UK company would be chargeable at a higher rate of tax if he were UK-resident than if he were non-resident. The difference in tax was said by HMRC to be approximately £200,000.

Condition B requires the following:

" regards the person, an officer of Revenue and Customs has reason to suspect that—

a) an amount that ought to have been assessed to relevant tax for the chargeable period may not have been assessed;

b) an assessment to relevant tax for the chargeable period may be or have become insufficient; or

c) relief from relevant tax given for the chargeable period may be or have become excessive."

HMRC's case was that:

"..the information already provided by Mr Betts gives a partial picture of his movements and more particularly his ties to the UK in the relevant period. Furthermore, based on that information there remains a doubt that he had left the UK permanently by 6 April 2008 to become not resident. The requested information will complete that picture and, if it shows that his ties remained substantially in tact [sic], condition B is satisfied. The Inspector will be able to show that an amount which ought to have assessed [sic] may not have been. The information is therefore reasonably required for the purpose of checking Mr Betts tax position and the appeal should be dismissed."

The Tribunal asked the HMRC officer (Mr Birkett) whether he was really saying, as indicated in HMRC's statement of case, that he needed the information 'in order' to satisfy condition B. Mr Birkett confirmed that was the case. HMRC was given further opportunity to explain their reasoning, but this did not satisfy the Tribunal that condition B had been met, and therefore they decided in favour of the taxpayer.

The Tribunal did clarify that in their view Sch36 para 1(1) was satisfied in that the statements sought, or at least those statements so far as they showed expenditure in the tax year in question, were reasonably required by HMRC for the purpose of checking the appellant's tax position. However condition B of para 21 of that schedule was not satisfied, and as a tax return had been submitted, the information notice was invalid.


3.1 Non-domicile spouse election for IHT

From 6 April 2013, it is possible for a non-UK domiciled spouse to elect to be treated as UK domiciled for IHT purposes. This allows for transfers between an otherwise non-domiciled individual and their UK domiciled spouse to be exempt for IHT purposes. In the absence of an election, transfers between spouses where one is UK domicile and the other is non-UK domicile are subject to a lifetime exemption cap of £325,000 (or equivalent to the prevailing nil rate band).

In the Trust & Estates newsletter (August 2013), HMRC has issued guidance on how to make a non-domiciled spouse election.

There is no specified format for an election, but it must be made in writing by the person who is not domiciled in the UK and should include:

  • full name and address of the person making the election;
  • their date of birth;
  • the date the election is to take effect from; and
  • the full name and date of birth of their UK-domiciled spouse.

The election should be sent to:

Trusts & Estates Risk Team (Elections)
Inheritance Tax
Ferrers House
Castle Meadow Rd

3.2 Inheritance tax treatment of compensation payments

The following extract from the August 2013 edition of HMRC's Trusts & Estates newsletter covers the IHT treatment of compensation payments.

HMRC Trusts & Estates are aware that the treatment of compensation payments for Inheritance Tax purposes can cause some difficulties for taxpayers and their agents. In particular difficulties can arise where compensation is received after the date of death.

There can be many situations where compensation arises. But there are certain principles that when followed ensure compensation payments are treated appropriately.

The approach is the same whether it is a claim that is specific to an individual, for example where they have received poor financial advice, or where a more widespread issue has arisen and a financial institution is instigating its own investigations into a larger body of transactions.

The right to pursue a claim for compensation is an item of property and therefore an asset of the estate. The open market value of the right at the date of death depends on several factors, but is fundamentally down to what was known, or capable of being known, at the date of death about:

  • the amount of compensation that might be reasonably anticipated based on the information available;
  • the likelihood of the claim being successful;
  • the likely costs that would be expected to be incurred in obtaining a successful outcome; and
  • the time delay between the date of death and the date when the compensation might reasonably be expected to be made.

The right to pursue a claim can be valuable whether or not the individual entitled to make the claim was aware of this right, provided that the information was capable of being known at the relevant date.

The open market value of the right to pursue the claim becomes more valuable as the outcome becomes more certain, so particular events can trigger a substantial increase in value.

Where personal representatives are aware of a potential claim at the date of death, they should record the existence of the claim on form IHT400 and provide as much information about the claim as they can. They should include a reasoned estimate of the open market value of the right to pursue the compensation where they are able to do so.

Guidance can be found in the Inheritance Tax manual at IHTM10261 onwards: .

In particular, the NHS continuing care scheme at: IHTM10270

and Equitable Life compensation payments at: IHTM10271

3.3 Inheritance tax quarters calculator for trusts

HMRC has published a new calculator you can use to quickly work out the number of complete quarters (three month periods) within a 10-year cycle for the purposes of charging or relieving inheritance tax on a relevant property trust.


4.1 SDLT claims for refunds following the Court of Appeal's decision in Pollen Estates

HMRC has issued a note inviting reclaims of overpaid SDLT as a result of the Court of Appeal decision in the Pollen Estates case. Claims are invited from charities that purchased a property jointly with a non-charity purchaser and thereby satisfied the relevant conditions, but did not claim the relief. Relief is limited to circumstances where the charity used the greater part of its share of the property for a charitable purpose.

The note explains the time limit for making the claim as follows:

Section 68 of the Finance Act 2003 provides that claims for charities relief must be made in a land transaction return or in an amendment to a return. Under Paragraph 6 of Schedule 10 to the Finance Act 2003, an amendment can be made no later than 12 months after the filing date for the return. The filing date for a land transaction return is 30 days after the effective date of the transaction (this is normally the completion date). Claims made after the expiry of the 12 month amendment period will be time-barred.

4.2 Lloyds Leasing

The Upper Tribunal has confirmed the decision of the First-tier Tribunal (FTT) in the Lloyds Leasing ship leasing case. The points considered were as follows:

Issue 1: The first issue was whether K-Euro was responsible for defraying all, or substantially all, expenses in connection with the vessels under the time charter throughout the charter period, within the meaning of section 123(1) of the CAA01. The FTT decided this issue in favour of Lloyds Leasing, and the Upper Tribunal agreed with this.

Issue 2: The second issue was whether K-Euro let the vessels on charter in the course of a trade which consisted of or included operating ships, within the 10 meaning of section 123(1) of the CAA01.

This issue was again decided by the FTT in favour of Lloyds Leasing, and the Upper Tribunal agreed with the FTT's reasoning.

Issue 3: The third issue was whether section 123(4) can apply in the circumstances where section 110 (rather than section 109) of the CAA01 is in point, namely where there is overseas leasing and no qualifying purpose so that the taxpayer is entitled to no allowances instead of 10% allowances. Section 123(4) of the CAA01 refers to the objective of obtaining writing-down allowances determined without regard to section 109 of the CAA01 (which denies 25% allowances but allows 10% allowances instead where there is overseas leasing and no qualifying purpose).

The FTT decided this issue in favour of HMRC and the Upper Tribunal agreed with this.

Issue 4: The fourth issue (if Issue 3 was determined so that in principle section 123(4) of the CAA could apply) was whether the main object, or one of the main objects, of any transaction or series of transactions which included the letting of the vessels on charter, was to obtain the 25% writing-down allowances claimed by Lloyds Leasing.

The FTT decided this issue in favour of Lloyds Leasing. The Upper Tribunal were divided on this issue. Judge Nowlan considered that errors of law led the FTT to apply the CAA s123(4) test in a wrong manner. In contrast Mr Justice Newey (who had the casting vote) was not been persuaded that the FTT applied an incorrect legal test. The conclusion was that the appeal on this point failed for this reason and therefore the decision in Lloyds Leasing's favour stood.


The IRS issued the following release on 19 August:

The Internal Revenue Service today announced the opening of a new online registration system for financial institutions that need to register with the IRS under the Foreign Account Tax Compliance Act (FATCA).

Financial institutions that must register with the IRS to meet their FATCA obligations can now begin the process of registering by creating an account and providing required information. Financial institutions will also be able to provide required information for their branches of operation and other members of their expanded affiliate groups in which the financial institution is the lead organization.

The registration system, designed to enable secure account management, is a web-based application with around-the-clock availability.

Within a secure environment, the new registration system enables financial institutions to:

  • establish online accounts;
  • customize home pages to manage accounts;
  • designate points of contact to handle registrations;
  • oversee member and/or branch information; and
  • receive automatic notifications of status changes.

Financial institutions are encouraged to become familiar with the system, create their online accounts and begin submitting their information. Starting in January 2014, financial institutions will be expected to finalize their registration information by logging into their accounts, making any necessary changes and submitting the information as final.

As registrations are finalized and approved in 2014, registering financial institutions will receive a notice of registration acceptance and will be issued a global intermediary identification number.

The IRS will electronically post the first IRS Foreign Financial Institution (FFI) List in June 2014, and will update the list monthly. To ensure inclusion in the June 2014 IRS FFI List, financial institutions will need to finalize their registrations by April 25, 2014.


5.1 Whether input tax wrongly claimed - Simple Solutions GB Ltd

The First-tier Tribunal has heard an appeal by Simple Solutions GB Ltd against a number of VAT assessments totalling £118,515 where HMRC contended that either input VAT had been reclaimed in respect of goods never supplied and for which no payment had been made, or input VAT was reclaimed for goods and services which should have been zero rated and so no input VAT repayment should have been made.

Simple Solutions GB Ltd had to rebut the case that it had made false and fraudulent VAT repayment claims. However in the course of the case it became apparent that the HMRC case officer had made few if any enquiries or checks to ascertain whether his suspicions of false and fraudulent claims were well founded. In cross examination HMRC's representative in the case put to the appellant's witness that the appellant had made fraudulent claims, but in the closing submissions the representative commented that HMRC had no evidence whatsoever of fraud or dishonesty in this case.

The Tribunal made the comment that if a member of the legal profession had cross examined a witness on the basis that fraud had taken place, when they had seen no credible evidence of such fraud, or dishonesty, which would be a serious matter of professional misconduct. The implication was that HMRC's representative was not a member of the legal profession.

The Tribunal concluded that the Simple Solutions GB Ltd's appeal should be allowed in full and that HMRC should pay the appellant's costs in full bearing in mind the lack of supporting evidence for the serious allegations made.

5.2 MTIC fraud and whether taxpayer's connected with fraud or should have been aware of the fraud

Smith & Williamson were the instructing accountants in the Upper Tribunal case of Davis & Dann Ltd and Precis (1080) Ltd, where the Upper Tribunal (UT) overturned a decision by the First-tier Tribunal (FTT) that the companies should have been aware of MTIC fraud involving Gillette razor blades, concluding that these companies were innocent parties to the fraudulent transactions.

The FTT had concluded that HMRC had satisfied it that the companies should have known that their purchases were connected with fraudulent evasion of VAT (as it turned out perpetrated by Leeming). This was based on the evidence considered as a whole. Some factors were, in the FTT's view, more compelling than others. They considered some aspects of the evidence were not conclusive by themselves but when viewed in the context of the evidence as a whole, supported their conclusion that the companies should have known that their transactions were connected with fraud.

Paragraph 14 of the UT case summarises the FTT's reasoning and the taxpayer's objections. The taxpayers criticised the FTT decision for not providing any analysis of what steps the companies could have taken to uncover the existence of the fraud.

The concluding paragraphs of the decision were:

"...In the absence of any evidence to demonstrate why they were not and without any explanation by the Tribunal as to why the factors to which they refer necessarily point to a connection with fraud, it seems to us that the Tribunal erred in concluding that the only reasonable explanation for the circumstances in which the Appellants' purchases took place was that they were connected to fraud. That is so, in our judgment, whether the various factors identified as relevant to their decision by the First-tier Tribunal are examined individually or as a cumulative whole.

This appears to us to be consistent with the overriding right of a taxpayer to recover input tax and the requirement for legal certainty for traders dealing in a market such as this. If the terms of dealing are broadly consistent with the way in which transactions in the market are ordinarily conducted, it can hardly be said that the only reasonable explanation for the circumstances in which the transactions took place is that the transactions are connected with fraud, even if some facets of the transactions might raise a suspicion of fraud. That is the case with regard to the Appellants in this appeal. HMRC may not be appreciative of the existence of a market that enables those who are intent on fraud to trade goods to that end. On the other hand there is no reason to penalise innocent traders in that market merely because it offers that facility."

5.3 Supplies of medical staff: taxable employment agency services or exempt medical services?

Rapid Sequence Ltd (Rapid), as a principal, provides the services of overseas based anaesthetists to hospitals in the National Health Service (NHS) as locums and receives fees for the services of the anaesthetists it procures based on the number of hours worked. As a principal, it pays the anaesthetists concerned a separately agreed hourly rate, the difference between the two rates representing the gross profit of its business.

Before the First-tier Tribunal Rapid contended that the services it provides are exempt from VAT under Item 5 of Group 7 of Schedule 9 VATA94, which provides an exemption for the provision of a deputy for a person registered in the register of medical practitioners. HMRC contended that in order to obtain the benefit of this exemption Rapid needed to be making supplies of medical care and in this case the supplies at issue were supplies of staff by Rapid Sequence to NHS bodies, not supplies by Rapid of medical care. The following notes extracted from the case summarise the issues around legislation and guidance:

5.........Article 131 of Council Directive 2006/112/EC introduces the scope for Member States to make exemptions from the requirement to charge VAT as follows:

"The exemptions provided for in Chapters 2 to 9 shall apply without prejudice to other Community provisions and in accordance with conditions which the Member States shall lay down for the purposes of ensuring the correct and straightforward application of those exemptions and of preventing any possible evasion, avoidance or abuse."

6. Article 132 of the Principal Directive sets out various exemptions from VAT for "certain activities in the public interest" which Member States are required to implement. Article 132(1)(c) provides that Member States shall exempt:

"the provision of medical care in the exercise of the medical and paramedical professions as defined by the Member State concerned".

7. This exemption is given effect to in Group 7 of Schedule 9 to the Value Added Tax Act 1994 ("VATA"). Items 1(a), 4 and 5 of Group 7 provide exemptions which are relevant to this appeal as follows:

"1. The supply of services [consisting in the provision of medical care] by a person registered or enrolled in ...

(a) the register of medical practitioners

4. The provision of care or medical or surgical treatment and, in connection with it, the supply of any goods, in any hospital or state regulated institution.

5. The provision of a deputy for a person registered in the register of medical practitioners."

The words in square brackets in Item 1(b) were added by amendments which came into force on 1 May 2007.

8. When Rapid Sequence first sought clarification of its VAT position from HMRC in 2005 VAT Notice 701/57, issued in March 2002, provided non-statutory guidance on the application of VAT to health professionals. Paragraphs 3.4 and 3.5 of that Notice provided guidance on the VAT treatment of the services of health professionals as follows:

"3.4 Can a business that employs or engages health professionals or unregistered care staff exempt their supplies?

Yes, provided that the business:

− acts as a principal (rather than an agent) in the supply of care; and

3.5 Can an agent arranging the supply of services by a health professional or an unregistered carer exempt their agency or arrangement fees?

No, if you are an agent, your commission, fee or any other charge that you make for arranging and administering the supply is standard-rated."

9. The Notice also provided guidance in paragraphs 6.1 and 6.2 on the position of deputising doctors as follows:

"6.1 Are the services of deputising doctors exempt?

Yes. If you are a deputy medical practitioner, your services are exempt in the same way as those provided by a normal practice GP...

6.2 Is VAT due on other charges made in connection with the supply of a deputising doctor?

No. The exemption also applies to:

− agency registration and administration fees;

− charges for transport;

− telephone and stationery costs; and

− any other charges integral to the supply of a deputy medical practitioner's services;

when these charges are made in connection with the provision of services by the deputising doctor."

10. The current version of Notice 701/57 issued in November 2012 does not contain the guidance referred to in paragraph 9 above but it does contain the following in paragraph 6.4 of the Notice:

"6.4 Supplies of self-employed locum GPs

When self-employed locum GPs supply their services to an employment business which makes an onward supply to a third party who is legally responsible for providing health care to the final patient, both the supplies to and from the employment business are taxable. The fact that the locum GPs may be supplied to a prison or other institution where they may not be supervised by any medical staff does not mean that the employment business supplying the locum doctor to the third party is legally responsible for providing healthcare to the final patient."

This reflects the terms of Revenue & Customs Brief 12/10 issued in April 2009 which aimed to clarify HMRC's policy on the VAT treatment of supplies of health professionals by employment businesses and which stated:

"Supplies of locum GPs

Where an employment business supplies a locum GP to a practice, the employment business' only responsibility is to make a taxable supply of staff to the practice, not exempt healthcare to the final patient."

The Tribunal considered the issues in the light of:

  • The provision of paramedical professionals who are under the control of the medical professionals to whom they were assigned does not amount to the supply of medical care and therefore cannot benefit from the exemption (Moher v HMRC, an Upper Tribunal decision involving the supply by an agency of services of locum dentists);
  • An individual cannot rely on the provisions of the Directive once it has been transposed into national law unless the national implementing measures are incorrect or inadequate (Kampelmann);
  • If a provision of national law is inconsistent with the principles of a Directive it must, so far as possible, be interpreted in the light of the Directive and so as to be consistent with EU law, unless it is clear that Parliament specifically intended to depart from the Directive. This may involve a substantial departure from the language used although not from the fundamental or cardinal features of the legislation. It is possible to read the legislation up (expansively) or down (restrictively) or to read words into the legislation (IDT) and;
  • The exercise of the power to define exemptions must be exercised in accordance with the principle of fiscal neutrality (J P Morgan Claverhouse).

With respect to item 5 of group 7 VATA Sch9, the Tribunal concluded:

"..we have no doubt that the business of Rapid Sequence, in the manner in which we have found it operates, consists of the provision of deputies for registered medical practitioners, whether that provision amounts to the provision of medical care or the provision of staff in the manner of an employment agency. The activity of arranging, as a principal, the placement of doctors seeking locum positions with NHS Trusts who Rapid Sequence have engaged themselves as principal, in the manner described in paragraphs 32 to 38 above, clearly falls within the plain meaning of Item 5.

.....Item 5 is written in plain English and lends itself to no other interpretation when construed in isolation. It is in clear contrast to the wording of Items 1(a) and 4 which refer to the direct supply of services of medical care; it is clear that those items relate to the direct supplies of medical services, such as by an NHS Trust who employs the doctor concerned, either under an employment contract or a contract for services, whereas on its face Item 5 goes further and extends the exemption to the provision of the person who supplies the medical services.

Without that extension it is hard to see why Item 5 would be necessary; the provision of the services of the deputising doctor, assuming he was a registered medical practitioner, would be covered by Item 1(a). It is also the fact, as we have observed, that Item 5 does not restrict the services provided by the deputy to those constituting medical care, as Item 1(a) does."

In contrast with the appellants the Tribunal could see no difference between the services provided by Rapid and those provided by Moher. The Tribunal then considered that as item 5 went beyond the scope of the EU VAT Directive it was incorrectly implemented and not corrected when the legislation was last amended in 2007. They thus concluded they had to give a conforming interpretation to the legislation, to interpret Item 5 as meaning (with the added words in square brackets):

"the provision of [medical care services provided by] a deputy for a person registered in the register of medical practitioners"

The Tribunal therefore concluded Rapid was not providing medical care services but supplying staff and that their appeal must fail.

5.4 Implications of planning permission conditions on VATA s35 and the applicability of the DIY builders' scheme

Following recent cases on the impact of planning restrictions on the applicability of the provisions in VATA s35, the First-tier Tax Tribunal has considered the case of Roy Shields.

Mr Shields originally lived in a converted building on the small holding which he owned and from which he ran a non VAT registered equestrian business and a VAT registered landscaping business. That building did not initially have the benefit of planning permission, and indeed he had previously been refused planning consent for a replacement dwelling on the site.

Mr Shields then obtained a planning consent for a new equestrian manager's house on the holding in March 2003 (planning reference X/2001/1360/0). That planning consent contained the following condition ("Condition 3"):

"3 The occupation of the dwelling should be limited to a person solely employed by the equestrian business at 274 Bangor Road, Newtownards, and any resident dependents.

Reason: the site is located within a green belt where it is the policy of the Department to restrict development and the consent hereby permitted, is granted solely because of the Applicant's special circumstances."

More recently, and in accordance with current planning policy under PPS 21, Mr Shields made a further application to Planning Service, and the occupancy condition referred to above was removed.

Prior to the removal of Condition 3, Mr Shileds had proceeded to construct his new dwelling and had lodged his claim under the DIY Building Scheme for recovery of VAT in the total sum of £6,189.56.

The Tribunal found that the dwelling was not built in furtherance of the business for the following reasons:

  • in the first place, Mr Shields had already been living on the property for some time – indeed since circa 1993. Initially he had lived in a property which did not have the benefit of planning permission, but in respect of which he subsequently achieved a Certificate of Lawful Use;
  • on the evidence of Mr Shields, the house was not actually "required" for the purpose of the equestrian business. There was no doubt it made the operation of that business easier, but it was not a functional necessity;
  • again, on the evidence before the Tribunal, the construction cost was privately financed by Mr Shields and the property did not form any part of the assets of either the equestrian business or the landscape business;
  • the evidence to the Tribunal was that the landscape business did assist the private loan which Mr Shields needed to construct the dwelling by the provision of collateral security, but there was a clear distinction between the two.

The Tribunal found that because of the siting of the dwelling in the green belt, Mr Shields found it easier to get planning permission by referring to the businesses with which he was involved. However they did not find that the construction of the dwelling was, of itself, in furtherance of the equestrian or, indeed, the landscaping business.

Whilst the Tribunal found that the planning conditions did contain a limitation as to occupancy it did not reach the level of being a prohibition on disposal or use such as to engage Note 2(c) of VATA Sch 8 group 5 referred to in VATA s35(4). The Tribunal therefore concluded that the taxpayer's appeal succeeded, subject to HMRC's own review of the actual claim in terms of quantum

5.5 Effectiveness of an Option to Tax

Ebly House Ltd (EHL) was incorporated in 2001, and was set up to renovate Ebley House with a view to its subsequent sale or rent. It opted to tax the property with effect from 21 November 2001. Ebley House was formerly a National Children's Home which was set up as a nursery and home for very young children in 1921 and continued as such until 1997. Following its purchase of the property, EHL refurbished it with the intention of marketing it either as a boarding school or as offices. For a period, the property was used to house workers. In 2005, planning permission was given for a change of use to offices.

In July 2007, EHL sold Ebley House to a charity then known as the Cotswold Chine School. That charity has now become part of the Novalis Trust. At the time of the sale, the option to tax was still in place. The sale of the property was treated by the Appellant as being exempt from VAT.

VATA Sch 10 para 5 provides:

(1) An option to tax has no effect in relation to any grant in relation to a building or part of a building if the building or part of the building is designed or adapted, and is intended for use—.....

(b) solely for a relevant residential purpose.

EHL contended that it took all reasonable steps to substantiate that the sale would be an exempt supply, and that the Cotswold Chine School had informed EHL's director that Ebley House would be used as a residential school for children with learning difficulties. EHL therefore argued that by virtue of paragraph 5(1)(b) of Schedule 10, the option to tax was of no effect, and the sale was VAT exempt. EHL also maintained that, in any event, the purchaser did in fact have that intention, and changed its plans only after the property was purchased.

HMRC contended that EHL had not discharged the burden of proving that the purchaser had the intention to use Ebley House as a residential school (as opposed to a non- residential school, or some other purpose), or that EHL genuinely or reasonably considered the purchaser to have this intention.

The Tribunal concluded that it would have been preferable if EHL had obtained a certificate or other documentary evidence from the purchaser at the time of sale as to the intended use of the property. However, nothing in the legislation or Public Notice suggests that this was necessary. The Tribunal therefore had to determine the purchaser's intention as a matter of fact, on a balance of probability, based on the evidence before it. On its consideration of the evidence and arguments as a whole the Tribunal was satisfied on a balance of probability that at the time of sale, the purchaser intended to use the property as a residential school.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.