VAT Update on Hotel La Tour Appeal – VAT is not recoverable on share sale costs

Last week marked the conclusion of the Hotel La Tour VAT case, with the Court of Appeal ruling in favour of HMRC. After facing two prior setbacks, HMRC has now secured a significant win through the Court of Appeal. We await to see whether Hotel La Tour will seek permission to appeal to the Supreme Court due to the sums involved with the irrecoverable VAT, totalling £76,822.95, remaining a central issue in this closely watched dispute.

The case involved the recovery of VAT on advisers’ costs relating to the share sale of a subsidiary. The Court of Appeal ruled in favour of HMRC, stating that a direct and immediate link needs to be identified between the input VAT and either the share sale or the company’s business as a whole. In this case, the input VAT was irrecoverable due to a direct link with the exempt share sale.

What next?

Should your business be impacted by the outcome of this case, please contact the Gravita team here.