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HMRC v Hotel La Tour Ltd

In HMRC v Hotel La Tour Ltd [2024] EWCA Civ 564 (21 May) the Court of Appeal (CA) held that input VAT which a parent company had incurred connected with the sale of shares in a subsidiary was irrecoverable reversing the decisions of the First-tier Tribunal (FTT) and Upper Tribunal (UT). 

Hotel La Tour Ltd (HLT) provided management services to a wholly-owned subsidiary. Both companies were members of the same VAT group. The subsidiary owned a hotel in Birmingham which HLT decided to sell to fund the development of a new hotel in Milton Keynes. This was achieved through a share sale. 

HLT sought recovery of the VAT incurred on the marketing and legal costs associated with the sale of the subsidiary since (it argued) the relevant services were directly and immediately linked to its downstream taxable activities namely developing and operating the new hotel in Milton Keynes....

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