West Devon Borough Council (“the Council”) carried out works of improvement to the Wharf at Tavistock with a view to generating jobs, tourism and generally improving the economy of that part of West Devon. The Council obtained a grant of £336,000 odd from European Union towards the reconstruction work which were in the sum of £830,000. The Wharf was to be occupied by an Arts Centre. The Council entered into a lease at a premium of £130,000 together with a peppercorn rent thereafter. The duration of the lease was 35 years. The Council sought to recover the input tax in respect of the building works under s.33 VATA 1993.

The Commissioners refused and the Council appealed to the Tribunal where it was unsuccessful. It further appealed to the High Court, again, its appeal was dismissed. The judge held that its supplies were not “non-business” within the meaning of s.33 VATA. An argument based on s.73(1) and s.73(2) VATA 1994 also was unsuccessful.

Hugh McKay, instructed by Dario Garcia, appeared for the Council