In Colin and Susan Slaymark v HMRC [2020] TC7709, the First Tier Tribunal (FTT) found that input tax on a commercial property where the occupants had no obligation to pay rent should be disallowed.

  • In 2008 Colin and Susan Slaymark purchased an industrial unit/warehouse in which they opted to tax for VAT purposes.
  • It was sold on 16 October 2015 for £1.5m plus VAT of £300,000.
  • From 2008 to 2015, the property was occupied by four different successive tenants and none of the tenants paid rent for their occupation of the property.
  • The final VAT return included the VAT of £300,000, reduced by input tax of £68,541.
  • HMRC disallowed most of the input tax and issued assessments of £64,446. The balance was allowed as relating to the fees of solicitors and estate agents on the sale of the property.
  • Colin and Susan Slaymark appealed the assessments on the basis that the costs should be allowed because they had carried on the economic activity of letting the property and/or of selling the property.

The FTT made  its decision based on two main issues:

  • Whether the occupants of the property were required to pay rent, and if not, whether there was an expectation that they would pay rent.
  • Whether the disallowed expenses related to any of the property’s taxable supplies.

FTT found that:

  • In relation to the first issue, the occupants had no obligation to pay rent. There was no expectation that rent would be paid and therefore there was no economic activity of letting the property.
  • In relation to the second issue, none of the claimed expenses related to the economic activity of selling the property which was the only taxable supply.

The FTT dismissed the appeal and upheld HMRC’s assessments of £64,446.


VAT: Land & Property (notes)
A handy outline of the VAT treatment of some of the more common supplies of land and property

VAT: Land & Property at a glance
An at a glance guide to VAT on common land and property transactions.

Opting to tax land and property
What is an option to tax? What do I need to do to opt to tax? What happens if I buy an opted property?

External links

Colin and Susan Slaymark v HMRC [2020] TC7709