VAT on farmhouse renovations: Occupied by farm contractor

[the_drookit_dug]

As part of a contract farming arrangement, a client has provided the contractor with full use of the farmhouse. (Client does not live in the farmhouse and never has). Several thousand was spend on repairs to the farmhouse beforehand - can the VAT on this expenditure be reclaimed as it would be if the contractor was an employee? No rent is being paid, and the occupation of the farmhouse is necessary for the contractor to fulfil his role under the contract farming agreement.

[AdamS93]

As part of a contract farming arrangement, a client has provided the contractor with full use of the farmhouse. (Client does not live in the farmhouse and never has). Several thousand was spend on repairs to the farmhouse beforehand - can the VAT on this expenditure be reclaimed as it would be if the contractor was an employee? No rent is being paid, and the occupation of the farmhouse is necessary for the contractor to fulfil his role under the contract farming agreement.

No.

To be able to claim input VAT there has to be a direct and immediate link to a taxable supply AND for incurred for the furtherance of business. The provision of land is not a taxable supply let alone when it is provided for no consideration. The fact the owner is not charging rent there is also no business there (based on the information provided).

[the_drookit_dug]

Cheers.

So I'm guessing it couldn't be argued that the repairs to the farmhouse are directly attributable to (and undertaken for the furtherance of) the owner's farming business - the use of the farmhouse being a necessity for the contractor's performance of the duties he's been contracted to undertake?