Where a tenant engages a builder to do some repairs on a leasehold property (to maintain it to original condition in accordance with the lease), this does not seem to meet the basic requirement for input tax, that the supply must be received by the tenant. In this case, it seems to be received by the landlord (his asset being altered).
I imagine the VAT in such circumstances is routinely claimed, but wonder what the thinking is - can we argue that the supply is in some sense received by the tenant?
It would seem unfair if the tenant could not recover the VAT.
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Assuming it is a tenant repairing lease then the Input TAx incurred is the tenants Input tax as it is for the purpose of his buiness where he is obliged under the terms of the lease to maintain the property. It is no different to the leasing of a car - the asset belongs to the leasing company but the obligation to maintain is the leasse's