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Praesto Consulting UK v HMRC

In Praesto Consulting UK v HMRC [2019] EWCA Civ 353 (11 March 2019) the Court of Appeal found that in the unusual circumstances of the case a company was entitled to a deduction for input tax on legal fees incurred in defending its director.

Mr Ranson had been an employee of CSP before setting up his own company Praesto which competed with CSP in the field of consultancy. The case related to invoices issued by Sintons Mr Ranson’s solicitors to Mr Ranson in relation to litigation initiated by CSP against Mr Ranson for breach of fiduciary duty. These invoices did not mention Praesto but were all paid by the company.

HMRC issued a notice of assessment to recover the input tax credit of £79 932 claimed by Praesto in relation to the VAT paid on the invoices. It relied on the facts that the...

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