Littlewoods Ltd v Revenue and Customs (VAT - whether costs incurred in the creation of product specific photographs for use in catalogues and/or in connection with the online retail store were directly and immediately linked to finance transactions made to fund purchases) [2025] UKFTT 1602 (TC) (16 December 2025)

Littlewoods Ltd v Revenue and Customs (VAT - whether costs incurred in the creation of product specific photographs for use in catalogues and/or in connection with the online retail store were directly and immediately linked to finance transactions made to fund purchases) [2025] UKFTT 1602 (TC) (16 December 2025)

The Tribunal held that the costs incurred in the creation of product-specific photographs are directly and immediately linked only to the taxable supplies of goods, not to exempt supplies of finance or insurance. The photographs serve the sole function of displaying products to customers in the online environment, substituting for physical inspection in a store, and are not used to promote or facilitate the provision of credit or insurance. The co-location of finance information on the same web pages does not alter the direct and immediate link of the photography costs, which are incurred exclusively for the purpose of making taxable retail supplies. The Tribunal rejected HMRC's argument...

Citation
[2025] UKFTT 1602 (TC)
Parties
Appellant: Littlewoods Limited; Respondents: The Commissioners for His Majesty's Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
16 December 2025
Procedural Posture
VAT Input Tax Recovery Appeal / First Tier Tribunal (tax) Judgment
Outcome
Appeal allowed
Legal Topics
Input Tax Recovery, Attribution of Costs, Partially Exempt Businesses, Direct and Immediate Link Test, Marketing Expenditure, Online Retail, Financial Services Exemption
Tax Law VAT Indirect Taxation Input Tax Recovery Attribution of Costs Partially Exempt Businesses Direct and Immediate Link Test Marketing Expenditure +2 more

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Parties

Littlewoods Limited

Appellant

The Commissioners for His Majesty's Revenue and Customs

Respondents

Procedural Posture

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

Legal Issues

  1. 1 Whether costs incurred in the creation of product specific photographs for use in catalogues and/or in connection with the online retail store are directly and immediately linked to finance transactions made to fund purchases, or solely to taxable retail supplies for VAT purposes.

Ratio Decidendi

The Tribunal held that the costs incurred in the creation of product-specific photographs are directly and immediately linked only to the taxable supplies of goods, not to exempt supplies of finance or insurance. The photographs serve the sole function of displaying products to customers in the online environment, substituting for physical inspection in a store, and are not used to promote or facilitate the provision of credit or insurance. The co-location of finance information on the same web pages does not alter the direct and immediate link of the photography costs, which are incurred exclusively for the purpose of making taxable retail supplies. The Tribunal rejected HMRC's argument...

Court Disposition

Appeal allowed

Orders

  • HMRC's refusal of the Appellant's claims to recover input tax on product-specific photography costs is set aside.
  • The Appellant is entitled to recover the input tax incurred on such costs as attributable solely to taxable supplies.