In P Malde v HMRC [2020] UKFTT 140 (TC) (4 March) the FTT held that a sole proprietorship was not entitled to recover VAT on legal costs incurred in relation to personal liability notices (PLNs) issued on the sole proprietor.
Mr Malde was a businessman who was registered for VAT in his own right in respect of a property holding business. He had also been issued with PLNs relating to his alleged involvement as shadow director of overseas companies importing excise goods to the UK without payment of VAT and duty.
The appellant claimed that he should be able to recover VAT on legal advice relating to the PLNs on the basis that there was a direct and immediate link with the activities of his sole proprietorship business.
In support of his position Mr Malde argued that a freezing order covering his assets illustrated that there was more than an incidental benefit to the business of the outcome of legal proceedings....
