This is a reasonably common situation, where an individual incurs significant legal fees, and seeks to claim the input tax charged on his company’s VAT Returns. It is especially relevant where the person is the sole director of the company.
Is the supply made to the company or the individual? Does the company therefore have the right of input tax deduction?
Often the issue can be very fine, but also the input tax can be substantial.
The most recent decision is pretty short and brings together four key UK and ECJ decisions which govern how the question is to be resolved. These cases highlight and explain some key phrases; “direct and immediate link,” “nexus,” “economic reality.” The facts of each case are to be tested against these criteria.