HM Revenue and Customs (appellant) v Hotel La Tour Ltd (respondent)

Wednesday 10 – Thursday 11 April 2024

By Appellant’s Notice filed on 28 September 2023, the Appellant seeks to appeal the decision, dated 24 July 2023 of the Upper Tribunal Tax and Chancery Chamber.

Background (summary):

1. The matter came before the Upper Tribunal as an appeal by HMRC against a decision of the First Tier Tribunal (FTT).
2. The FTT had allowed an appeal by the Respondent tax payer against a decision of HMRC, and corresponding assessment, which was made on the basis that the Respondent was not entitled to an input deduction in respect of certain services supplied to the Respondent because, in HMRC’s view they were directly and immediately linked to the Respondent’s exempt supplies.
3. The claimed deductions related to professional fees paid in respect of the sale of shares in a subsidiary company, the proceeds of which were to be used to develop a new hotel.
4. The FTT found that there was a direct and immediate link between the professional services and the Respondent’s downstream taxable general economic activities and the chain was not broken by the share sale – deciding that the general position that it was necessary to have a direct link between the input and output transaction was modified in fund-raising transactions, and allowed the appeal.
5. The Matter came before the UT which considered, and dismissed two grounds of appeal.

View hearing:

Day 1

Part 1

Part 2

Day 2

Part 1