The case involved an option to tax land under the UK VAT provisions and under consideration was whether an option survived partnership changes. The Court was also asked to determine whether there was one partnership or two and whether the decision of the First-tier Tribunal's (FTT) findings of fact were supported by evidence.

Background

The taxpayers were a husband and wife who owned and farmed the land in question. A company was formed to develop a golf course on part of the land, but it was decided that the golf course would be operated by a partnership (which the taxpayer's sons then joined) rather than the company.

An election to waive exemption in respect of the land was notified by the husband and wife to HMRC. At a later point in time, the taxpayers’ sons joined the partnership. As a preliminary issue, the FTT found that the partnership was bound by the election and rejected its contentions that the option to tax was made by the parents as landowners and not by the partnership which had never opted to tax the golf course since there would have been no benefit in doing so.

The taxpayers appealed, contending that the FTT's factual conclusion was wrong. They argued that it should have decided that there was one partnership between the parents as landowners and another as proprietors of a golf club and that the sons were admitted to the latter partnership but not the former.

Further, they contended that the transfer of the ownership of the land from the parents to the enlarged partnership with their sons was a separate event which did not relate to a golfing partnership asset, and thus that transfer effectively nullified the election since the parents, alone, were no longer in a position to dispose of the land.

Decision

The UT allowed the appeal.

The FTT had been entitled to find that a partnership between the parents, whose business was the running of a golf course, came into existence.

Whilst the argument that there was no good reason for the golf partnership to opt to waive the exemption in June 1990 might well be correct, it was just as difficult to understand why the property-owning partnership (if there was one) exercised the option.

The UT held that the FTT's finding that the sons joined the single golf partnership was consistent with the evidence and therefore unassailable. However, the FTT's determination implied a finding of fact that the land was an asset of the golf partnership.

It was not clear from the FTT's decision that that particular point had been addressed at all, and therefore the UT could not be confident that such a finding had been made.

Accordingly, it was not possible for the UT to revisit the decision and it was therefore necessary for the matter had to be remitted to the FTT for fresh consideration before a differently constituted panel.

The full text of the case is available at http://www.tribunals.gov.uk/financeandtax/Documents/decisions/Wrag_Barn_Golf_and_Country_Club_v_HMRC.pdf