Ince Gordon Dadds LLP v The Commissioners for HMRC

Ince Gordon Dadds LLP v The Commissioners for HMRC

Input VAT incurred by WG for services relating to the reverse takeover and fundraising cannot be recovered by the VAT group representative (Culver) because the funds raised were used to acquire assets (entities) intended to be customers of Culver’s services, not for Culver’s own economic activity or taxable supplies. The use of acquired assets as consumers of taxable supplies does not satisfy the legal principles enabling such supplies and activity to be relied on as downstream taxable supplies and economic activity of the acquiring company. Section 43 does not permit matching deemed supply to the group representative’s actual intention in place of the recipient’s intention.

Parties
Appellant: Ince Gordon Dadds LLP; Respondents: The Commissioners for His Majesty’s Revenue and Customs
Jurisdiction
England and Wales
Judgment Date
16 January 2023
Procedural Posture
Tax Appeal / Final Judgment (full Decision)
Outcome
Appeal dismissed
Legal Topics
VAT Groups, Input Tax Deduction, Economic Activity, Fundraising and Overheads, Reverse Takeover, Attribution of Input Tax, Section 43 VAT Act 1994
Tax Law VAT VAT Groups Input Tax Deduction Economic Activity Fundraising and Overheads Reverse Takeover Attribution of Input Tax +1 more

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Parties

Ince Gordon Dadds LLP

Appellant

The Commissioners for His Majesty’s Revenue and Customs

Respondents

Procedural Posture

Tax Appeal / Final Judgment (full Decision)

Legal Issues

  1. 1 Whether section 43 VAT Act 1994 allows the actual intention of the VAT group representative as to economic activity and taxable supplies to be matched to the deemed supply of services to the group representative
  2. 2 Whether services received and paid for by an acquiring company for a takeover and fundraising are used or to be used for the purpose of any business carried on or to be carried on by the acquiring company via the acquired company for section 24 VAT Act 1994
  3. 3 Whether taxable supplies to be made by the acquired company can be relied on as taxable supplies of the acquiring company for section 26 VAT Act 1994

Ratio Decidendi

Input VAT incurred by WG for services relating to the reverse takeover and fundraising cannot be recovered by the VAT group representative (Culver) because the funds raised were used to acquire assets (entities) intended to be customers of Culver’s services, not for Culver’s own economic activity or taxable supplies. The use of acquired assets as consumers of taxable supplies does not satisfy the legal principles enabling such supplies and activity to be relied on as downstream taxable supplies and economic activity of the acquiring company. Section 43 does not permit matching deemed supply to the group representative’s actual intention in place of the recipient’s intention.

Court Disposition

Appeal dismissed

Orders

  • Input VAT recovery denied for £73,238 relating to Project Kappa fundraising and takeover services.
  • No entitlement to input tax deduction under section 24, 26, or 43 VAT Act 1994.