Top UK Court Rules Leaseback Tactic Merits VAT Zero Rating

Law360, London (March 31, 2021, 12:02 PM BST) -- The sale and immediate leaseback of a property that benefited from zero rating for value-added tax does not mean the property was disposed of, preventing the tax authority from clawing back the tax break, the U.K. Supreme Court ruled on Wednesday.

The court ruled that HM Revenue and Customs was wrong to trigger the claw-back of a tax-free supply of goods for the construction of a socially useful asset, in this case a care home. The purpose of the option to claw back the tax break is to encourage those benefiting from the discount to maintain some economic interest in the project,...

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