The CIC Lennartz FTT and UT allowed for input tax claims on refurbishment for non-business use, but output tax was due over a ten-year period. However, the scope of Lennartz claims was reduced after the ECJ case of VNLTO. Grant funded education was considered non-business, but the taxpayer argued that grants were consideration for the supply of education, making the non-business activity exempt. The taxpayer won the consideration argument, but HMRC won the s81 (3A) argument. HMRC allowed FE colleges to choose between the CIC decision or staying with the original non-business treatment. The later appeal is against an assessment for output tax on non-business use of the buildings in a later period once the taxpayer had stopped accounting.
Source KPMG
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