When a person claims he is making or receiving a supply in order to recover input tax, he must show that there is a direct link with the other party (Staatssecretaris van Financiën v Coöperatieve Aardappelenbewaarplaats GA (Case 154/80) [1981] ECR 445; C & E Commrs v Apple & Pear Development Council (1985) 2 BVC 200,198; Naturally Yours Cosmetics Ltd v C & E Commrs (Case 230/87) (1988) 3 BVC 428; Medical Centre Developments Ltd [1998] BVC 2,310).

Various levies in the agricultural sector, such as Meat and Livestock Commission levies, are regarded by HMRC as being consideration for taxable supplies.

Intention of the parties

A key point is the terms of a written agreement.

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