In Tower Resources v HMRC [2019] UKFTT 442 (8 July 2019) the FTT found that a holding company was making supplies for consideration to its subsidiaries and could therefore recover input tax.
Tower Resources (Tower) acquires licences to explore for and produce oil in sub-Saharan Africa. This involves preparation for drilling of the wells which both discover and produce the oil. Such an operation generally takes up to 10 years between the first step and ‘first oil’. The exploration and production activities in the various countries are not undertaken by Tower but conducted through local subsidiaries. The provision of technical services and payment of local costs by Tower is charged to the subsidiaries through the addition of the relevant sums to the balance of the intercompany loan accounts.
HMRC had denied input tax credits on the ground that Tower did not make supplies for consideration to its subsidiaries. The issue...
