If you are involved in a number of associated companies, this First Tier decision is worth a read.
The underlying technical issue was to do with a Partial Exemption calculation, and input tax incurred in relation to one company’s investment property activities.
The decision is not helped by a non-sensical HMRC decision: “HMRC’s decision to disallow this claim was based on the belief that when companies with a common director supply services to each other there is not a vatable supply as the other company could have supplied the services itself.”
The decision refers to ‘dual capacity companies,’ which had a common sole director. The two companies had quite distinct but related activities. The director had no clear inter-company agreement. In hindsight a simple Heads of Terms agreement would have saved him the stress of enduring the appeal process!