In The Wellcome Trust v HMRC [2016] UKFTT 56 (2 February 2016) the FTT found that the ‘Lennartz mechanism’ could not be applied to a building occupied by the trust.
The trust had been established under the terms of a will for the advancement of medical and scientific research. It appealed against HMRC’s decision to deny a claim for repayment of input tax incurred on a building purchase and on construction services on another building using the Lennartz mechanism. Both buildings included space for the trust’s offices.
In Lennartz v Finanzamt Munchen III (C-97/90) the ECJ had found that where a taxable person uses goods which are assets of his business partly for non-business purposes that person has in principle a right to treat those assets as business assets and to claim input tax in full and then to account for output tax on the private use...
