We recently had an issue whereby a VAT refund claimed on pre trading expenses was disallowed by Revenue.

A planning issue had thwarted the efforts to proceed with economic activity.

In support of our case to allow the claim we quoted three cases heard in the ECJ, and one which went through the Irish courts.

Rompelman

Ghent Coal.

Eircom Park/ Crawford v Centime

Summary

In the Rompelamn case it was established that VAT inputs could be claimed on activities prior to carrying on a trade.

Ghent Coal built a terminal prior to trading, the land was CPO’d and the trade never commenced. It was ruled that the costs were allowable because at the time they were incurred, there was an intention to trade.

With Eircom Park, planning permission was refused for a soccer stadium, Revenue refused input VAT on set up costs as the project never went ahead. Following a journey through the High Court  judgement was awarded to the tax payer. This decision was not appealed. It was specifically stated that the VAT reclaim could not be denied because of planning refusal.

Conclusion

It would appear that Revenue are disallowing refund claims contrary to the rulings of the above cases.

It is prudent to register for VAT at an early stage prior to incurring any costs in relation to a proposed trade.

Feel free to contact us if you require any further clarification.