In Babylon Farm Limited v HMRC [2021] UKUT 0224, the Upper Tribunal (UT) found that the First Tier Tribunal (FTT) had erred in law but had been correct to find the appellant's hay supplies did not constitute an economic activity for VAT purposes.

On the first point of appeal, the appellant argued that a person is a taxable person and so entitled to claim input VAT so long as that person is Registered for VAT, according to VATA 1994. The legislation requires HMRC, at para 13 (2) Sch 1 VATA 1994, to deregister anyone who ceases to be registrable.

The UT considered the second ground for appeal and found that by not considering the PVD and not applying the process as set out in the leading case, Wakefield, the FTT had erred in law. The UT remade the decision and found:

Useful guides on this topic

Haymaking for own livery not a business for VAT   
In Babylon Farm Ltd v HMRC [2019] TC7356  a company that produced hay and maintained outbuildings on its owners' land was not found to be running a business for VAT and a £19k input VAT claim was disallowed.

Starting in business: VAT
One of the first decisions to make when starting in business is whether or not you should register for VAT.

Registering for VAT
When should a business register for and charge VAT? What are the VAT registration limits and VAT rules after Brexit? What penalties might HMRC issue for late notification of registration?

When do I have to deregister for VAT?  When can I voluntarily deregister?  What penalties might HMRC issue if I am late notifying them of mandatory deregistration?

External links:

Babylon Farm Limited v HMRC [2021] UKUT 0224

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