For VAT advisers, the question of whether there is a business (an economic activity) is important because sometimes they seek to show that there is a business, e.g. to justify claiming significant amounts of input tax, while accounting for little output tax. However, in other cases they try to prove that there is no business, e.g. to avoid paying significant amounts of output tax, where little input tax is recoverable. Sometimes, there is no clear answer. The adviser must weigh up the facts to arrive at a sensible treatment. HMRC may see the facts differently.
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