Denbrae Ltd v Revenue & Customs [2010] UKFTT 195 (TC) (28 April 2010)

Denbrae Ltd v Revenue & Customs [2010] UKFTT 195 (TC) (28 April 2010)

The legal fees incurred by the Appellant were not for the purpose of its economic activities but to protect and recover assets. There was no direct and immediate link between the input tax claimed and any taxable supplies. Therefore, the input tax was not deductible.

Citation
[2010] UKFTT 195
Parties
Appellant: Denbrae Limited; Respondents: The Commissioners for Her Majesty’s Revenue & Customs
Jurisdiction
United Kingdom
Judgment Date
28 April 2010
Procedural Posture
VAT Input Tax Appeal / First Tier Tribunal (tax), Final Judgment
Outcome
Appeal dismissed
Legal Topics
Input Tax Deduction, Attribution of Input Tax, Economic Activity, Litigation Costs
Tax Law VAT Input Tax Deduction Attribution of Input Tax Economic Activity Litigation Costs

Case Brief

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Parties

Denbrae Limited

Appellant

The Commissioners for Her Majesty’s Revenue & Customs

Respondents

Procedural Posture

VAT Input Tax Appeal / First Tier Tribunal (tax), Final Judgment

Legal Issues

  1. 1 Whether input tax incurred on legal fees relating to action against previous directors is attributable to taxable supplies made by the Appellant
  2. 2 Whether there was a direct and immediate link between the input tax and taxable supplies
  3. 3 Whether the Investrand BV principle applies

Ratio Decidendi

The legal fees incurred by the Appellant were not for the purpose of its economic activities but to protect and recover assets. There was no direct and immediate link between the input tax claimed and any taxable supplies. Therefore, the input tax was not deductible.

Court Disposition

Appeal dismissed

Orders

  • Notice of Amendment to Assessment dated 25 November 2005 confirmed
  • Refusal to repay voluntary disclosure dated 5 October 2006 confirmed