UK Supreme Court: VAT Deduction Denied on Fees for Share Sale Funding New Hotel Project

• The case addressed whether Hotel La Tour Ltd (HLT) could deduct VAT on professional fees from selling its subsidiary’s shares to fund a new hotel.
• HMRC argued the fees were linked to the exempt share sale and not deductible; HLT claimed they were for its general taxable business.
• The Supreme Court upheld lower court rulings that the fees were directly linked to the exempt share sale, so the VAT was not deductible.
• The Court confirmed the “direct and immediate link” test applies, regardless of the purpose of raising funds for taxable activities.
• HLT’s arguments about VAT grouping and purpose were rejected, and the appeal was dismissed unanimously.

Source: bailii.org

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

---

---