Rules is rules: VAT input tax requirements

Mpala Mufwankolo ran a pub in Tottenham, renting the property from a landlord who had opted to tax it.  HMRC declined to allow the recovery of the relevant input tax and, in [2021] UKFTT 388 (TC), the First-tier Tribunal agreed with HMRC.  Why so?

Unfortunately, the lease was in the name of Mr Mufwankolo’s wife.  It’s not completely clear why that was: the report of the case records only that ‘the lease for the property was originally established in the names of his wife and himself, but the lease as signed was in his wife’s sole name’.

Worse than that, it appears that it was also she who actually paid the rent, from her own bank account.  One assumes that her husband reimbursed her, though the case report is not explicit on the point.

If the business had been run as a partnership between them, there would have been no problem: HMRC accept that a partnership can recover input tax in respect of a lease granted in the name of a partner provided that:

  • the partner is not VAT registered in his or her own right;
  • the partner gives the rent invoice to the business for payment;
  • the business shows the expenditure in full in its accounts; and
  • the whole of the premises is used by the business for the purposes of its business.

The same principle applies, by the way, to companies where the lease is granted in the name of an individual instead of the company.

Input tax would also have been recoverable if Mr Mufwankolo’s wife had sublet the property to her husband (as, according to him, she was permitted to do), opted to tax the property, registered for VAT and provided a VAT invoice.

Sadly, she didn’t, so it wasn’t.

It’s hard not to feel some sympathy for Mr Mufwankolo.  VAT had plainly been paid on supplies that had been consumed for the purposes of a taxable business.  To deny relief on the basis that technically the supply had been made to the wrong person comes close to pedantry.  Still, rules is rules: the taxpayer will have to chalk it up to experience and do better next time.  Readers should take care not to be caught out in the same way.

For more information, please get in touch with your usual BKL contact or reply to this email.



Sam Inkersole

In 2022, Sam won the Taxation’s Rising Star award at the Taxation Awards in and was named in the Accountancy Age 35 Under 35.

Jon Wedge

While Jon’s client work focuses on the financial services sector, he also oversees the firm’s assurance service, as well as supporting the trainees following in his footsteps.


Elana joined us in 2017 as an ACA trainee, after graduating from Durham University where she had studied languages. She is now a manager in our assurance team.


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