The Court of Appeal (by a majority) upheld the appeal of Praesto Consulting UK Ltd against HMRC’s decision to deny them input tax recovery.
The background was that the company was set up by a number of ex-employees of a competing company, Computer Systems plc, or CSP. CSP sued the Director or Praesto and the employees, but not Praesto itself. The company paid the legal fees to defend the case and claimed input tax.
The FTT said that the company was effectively a party to the case and was effectively recipient of the supplies, and therefore entitled to deduct input tax. The Upper Tier overturned this decision.
The Court of Appeal, in allowing the appeal by the company cautioned that the decision was based on its particular facts and suggested it would not have wider relevance as a precedence. However, the closely argued analysis is a useful resource for similar cases.
(And, I’m sure HMRC will use the dissenting Judge’s comments in their future arguments! And it wouldn’t be the first time they have done this.) http://www.bailii.org/ew/cases/EWCA/Civ/2019/353.html
About Les Howard
Hi, I am a VAT Consultant, working mainly with charities. I am based in Cambridgeshire
I have over 20 years experience in VAT, and am currently also a part-time member of the Tax Tribunals.