BAA has lost an appeal against HMRC, after an Upper Tier Tribunal ruled that £6.7m VAT incurred on professional fees could not be reclaimed.
The Court of Appeal reiterated the UTT’s decision in BAA V HMRC, after BAA wanted to reclaim VAT on advisory fees connected to the acquisition of BAA by a holding company.
In 2006, Spanish company Ferrovial SA acquired BAA, in addition to Airport Development and Investments Ltd (ADIL) acquiring BAA shares.
BAA,representative member of the VAT group, claimed recovery of the VAT input tax incurred by ADIL on legal costs and other professional fees incurred prior to the acquisition of BAA.
It argued that the input tax incurred by ADIL should be offset against the output tax on the taxable supplies made by the BAA group.
However, the Court of Appeal found in favour of HMRC and ruled ultimately that the VAT cannot be reclaimed.