Summaries of interesting VAT cases for the SME owner.
In Aspire in the Community Services Limited v HMRC [2026] TC09789, the First Tier Tribunal (FTT) allowed recovery of input VAT on purchases made before the Effective Date of Registration (EDR). Under the pre-registration input VAT reclaim rules, there was no basis for taking into account pre-registration use.
In Alan and Diane McFarland (a partnership) v HMRC [2026] TC09799, the First Tier Tribunal (FTT) found that the supply of 'bed and breakfast' services provided for cattle was not two separate supplies for VAT purposes.
In Story Terrace Limited v HMRC [2025] TC09725, the First Tier Tribunal (FTT) found that a company providing personalised ghost-written books was making a zero-rated supply for VAT purposes. The book was the predominant element of the supply despite significant research, writing, and design services, which would have been standard-rated in isolation.
In Julian & Anor v HMRC [2026] TC09768, the First Tier Tribunal (FTT) found that taxpayers who failed to register for VAT had a reasonable excuse. In the circumstances, it was objectively reasonable for them to be unaware of changes to the Agricultural Flat Rate Scheme, which resulted in their VAT registration obligation.
In Mark Glenn Ltd v HMRC [2026] UKUT 00034, the Upper Tribunal (UT) found that the supply of a female hair loss treatment system was zero-rated for VAT purposes. In the circumstances, hair loss was a disability, and the treatment consisted of adapting goods to suit the condition of the disabled person.
In HMRC v Hotel La Tour Ltd [2025] UKSC 46, the Supreme Court upheld the Court of Appeal’s ruling that input VAT on professional fees incurred in connection with an exempt share sale were not deductible.
HMRC have published Revenue and Customs Brief 1 (2026): 'Removal of linked goods concession', which confirms that the Extra Statutory Concession (ESC) for VAT on minor promotional items supplied in linked supplies schemes has been withdrawn.
