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Update - Supreme Court Appeal - judgement due on the 17 December 2025 - The Supreme Court unanimously dismisses the appeal and agrees with the court of appeal judgment that input VAT on professional advice was irrecoverable as there was a direct link between the professional fees and the sale of the shares.  Please see link below to Supreme Court press release.

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https://supremecourt.uk/uploads/uksc_2024_0086_press_summary_be4fb03ee3.pdf​

 

Earlier Update - The Court of Appeal has overturned (23 May 2024) the below rulings in the FTT and UT on the basis that the purpose of the share sale was irrelevant. The key factor was that the input VAT incurred in relation to costs for advice in the run up to the share sale was directly linked to the Exempt sale of shares and as such was irrecoverable.  It is possible that Hotel la Tour Ltd will request to have the case heard in the Supreme Court.

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FTT and UT Rulings below

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 The Sale of Shares In a Subsidiary to Fund Business Expansion

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As illustrated in the case HMRC vs Hotel la tour, it is possible to recover input VAT on costs related to the sale of shares in a subsidiary which will be used to fund expansion of a taxable business.

 

 Basically the VAT was recoverable because:

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• The costs were incurred to fund the businesses expansion providing taxable supplies and as such the associated VAT was recoverable

• The costs were not incorporated into a component of the share price

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See Link below to the Case Rulings.

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THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMS v HOTEL LA TOUR LTD [2023] UKUT 00178 (TCC) - GOV.UK (www.gov.uk)

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-Contains public sector information licensed under the Open Government Licence v3.0.

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