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VAT 'Abuse of Rights'

Hui Ling McCarthy Barrister at Gray's Inn Tax Chambers discusses the ambit of the principle of abuse of rights
Since the ECJ's ruling in Case C- 255/ 0 2 Halifax plc v Commissioners of Customs & Excise [2006] STC 919 at the beginning of 2006 HMRC has enthusiastically pursued abuse of rights arguments to attack what it sees as unacceptable VAT planning denying recovery of input tax by exempt traders or in the course of obtaining disclosure of tax advice during preliminary proceedings such as in MMO2 plc & O2 Communications 19514.
Readers will be familiar with the Halifax test for a finding of abuse:
'… in the sphere of VAT an abusive practice can be found to exist...

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