In Hotel La Tour Ltd v HMRC [2021] UKFTT 451 (TC) (1 December 2021) the FTT decided that a company was entitled to recover VAT on the cost of professional services incurred in relation to the sale of shares in its subsidiary. The professional fees were directly and immediately linked to the parent company’s taxable activities because the shares were being sold to fund the development of a new hotel; and that the link is not broken by the share sale.
Hotel La Tour Ltd was the 100% owner of the subsidiary and provided management services to it. Both companies were members of the same VAT group. The subsidiary was sold to raise funds to develop a new hotel. The FTT decided that the sale of shares was exempt rather than outside of the scope of VAT on the basis that:
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