 Joint lease of office and office facilities
A firm of accountants has just lost their claim that the grant by the firm of licences to occupy its business premises was exempt from VAT (Pethericks & Gillard Ltd VTD 20564). The facts were that in addition to working on the partnership’s business, each of the partners ran a separate company. The partnership gave each company a licence to occupy the partner’s room and use all the office facilities (including the services of secretaries and the post room) when the partner was working on their own company’s business.
The tribunal accepted that, had it just been a licence for each partner to occupy his room, then it would have been exempt from VAT as licences to occupy land are normally exempt from VAT. European law had established that joint licences could be exempt and the tribunal decided that this ruling applied even where the occupation was jointly not only with the other licencees (the other partners) but also with the landlord (the partnership). Nevertheless, the Tribunal ruled against the firm and held that the licences were subject to VAT because they included the use of office facilities. The tribunal considered that these facilities were so integral to the licences it meant that overall it was not an exempt supply of licences to occupy land.
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