At the beginning of November the Upper Tribunal released its decision in HMRC v Airtours Holiday Transport Limited (previously My Travel Group) [2010] UKUT 404 (TCC) allowing HMRC's appeal and disallowing the taxpayer's claim for input tax incurred when paying the fees of the professional services firm which had provided advice to the taxpayer's finance providers.
The facts in Airtours
The facts in Airtours are relatively straightforward. In late 2002 Airtours was experiencing financial difficulties. It was backed by a number of financial institutions who were considering whether to renew revolving loan facilities. In November 2002 those financial institutions and Airtours entered into a tripartite arrangement with PwC under which PwC was engaged to provide advice on Airtours' situation to the financial institutions. The fees for the services provided under this engagement were to be paid by Airtours.
The First-tier Tribunal considered PwC's letter of engagement. Its analysis...
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