If you arrived here through a search engine I imagine you are a fan of castles. Here's a romantic ruined example which you might enjoy:
http://www.harewood.org/conservation-estate/conservation-projects/harewood-castle
That's nice; but what has it to do with VAT? Well, it has recently been the subject of a VAT tribunal decision in which the forces of HMRC laid siege but failed to break the spirit of its garrison.
This is Harewood Castle, which forms part of the Harewood Estate. It is a protected monument which has until recently been so ruined as to be unsafe both to itself and passers-by. The only solution for the Estate was to spend a lot of money securing its structure. VAT was incurred on the works. The Estate reclaimed the VAT on the basis that the Castle was going to take a part in making taxable supplies.
A problem arose. It was not established at the outset exactly what that part was going to be. No business plan was drawn up by the Estate, and no budget of income to be generated. HMRC's foot soldiers saw a breach in the defence and went for it. Without a business plan, there was no business intention (they said), and that meant that the costs were not incurred with the actual purpose or intention of making taxable supplies. In any case, the listed status of the monument meant that the Estate had no choice but to maintain it come what may. And they had received grants to help them with the cost (this often causes HMRC to jump to conclusions).
The garrison fought back. It explained that there was plainly no point in drawing up a business plan because the financial predictions would be pure fantasy - just castles in the air. They did not need a document telling them what activities they would carry out because they were clever enough to remember them without writing them down. They did not need to borrow, so they did not need a formal business plan.
As to the intended uses, these were obvious. It would be used for television backdrops (some of which had been the subject of negotiation) and the Castle would be central in their attractions to VAT paying tour customers. It could not help but be used for business purposes in a small but taxable way. It did not matter that there had been limited success in that endeavour, nor that the property would have had to be maintained anyway. The key aspect was that the costs were to be used in making intended taxable supplies.
To cut to "la chasse", the tribunal poured boiling oil over HMRC's siege engine. The Harewood Estate was duly allowed to reclaim its VAT.
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