The First Tier Tribunal (FTT) upheld the appeal against HMRC for a VAT assessment of £18,649 issued under section 73 of the Value Added Tax Act (VATA) 1994, to Welsh hairdressing business, Errol Willy Salons Ltd in 2017.

Errol Willy, who owns and runs the Cardiff-based salon, rented out two rooms in the property to two separate beauticians who both ran their own businesses. Both beauticians provided their own equipment, materials, and other products including towels, and were responsible for cleaning the space with their own products. The rooms were also decorated by the beauticians, and not Erroll Willy’s salon.

During the period of the assessment, only one of the rooms was used by a beautician, referred to as K in court, and Errol Willy charged rent for the room, calculated as 40% of K’s takings.