Asington Ltd v Commissioners of Customs and Excise

Facts

Asington Ltd is a family-controlled property investment company of which Mr Tom Flaherty was the majority shareholder and former managing director, his wife and daughter being the directors. Between 1983 and 1993 it acquired 36 Grindlay Street, Edinburgh, then comprising four separately owned flats, and refurbished and converted the property into eight self-contained flats. Having carried out market research suggesting that the self-service flat market was becoming popular, Asington approached Triple Crown Properties Ltd, an Edinburgh company expert in that field, and in 2002 granted TCP a one-year lease from 1 April 2002 of seven of the flats, fully furnished and equipped, at a rent of £54,000 per annum, the permitted use being as serviced residential flats. TCP operated them as Fountain Court serviced apartments, running a reception and office at nearby 122 Grove Street, providing housekeeping, laundry, car parking and other services, and letting the apartments to holidaymakers and business travellers for periods between one night and about eight weeks. On its first VAT return Asington claimed repayment of input tax of £38,701.69. By letter of 24 September 2002 Customs decided that the letting to TCP was an exempt supply, and confirmed that decision on reconsideration in letters of 11 October and 14 November 2002. Asington appealed to the Tribunal.