Supreme Court Clarifies VAT Recovery Rules on Share Sale Costs in Hotel La Tour v HMRC

• The UK Supreme Court ruled against Hotel La Tour Ltd, confirming that VAT on professional fees related to an exempt share sale is not recoverable.
• The Court upheld the “direct and immediate link” test, stating that input VAT recovery depends on the direct connection between costs and the exempt transaction, not on how sale proceeds are used.
• The intended use of funds raised from an exempt share sale (such as funding taxable activities) does not allow for VAT recovery on related costs.
• The decision provides clarity and reaffirms that the purpose of a transaction does not override the direct link test for VAT recovery.

Source: deeksvat.co.uk

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.

---

---