Taylor Pearson (Construction) Ltd v Revenue & Customs (VAT on fees for design of tax avoidance scheme for paying directors' bonuses) [2019] UKFTT 691 (TC) (13 November 2019)

Taylor Pearson (Construction) Ltd v Revenue & Customs (VAT on fees for design of tax avoidance scheme for paying directors' bonuses) [2019] UKFTT 691 (TC) (13 November 2019)

The services were used for the purposes of the company’s business, specifically to incentivise employees in a tax-efficient manner, and did not have a direct and immediate connection with the issue of share capital (an exempt supply). Therefore, input VAT on the tax advice fees was deductible.

Citation
[2019] UKFTT 691 (TC)
Parties
Appellant: Taylor Pearson (Construction) Ltd; Respondents: The Commissioners for Her Majesty’s Revenue & Customs
Jurisdiction
United Kingdom
Judgment Date
13 November 2019
Procedural Posture
VAT Assessment Appeal / First Tier Tribunal (tax Chamber) Decision
Outcome
Appeal allowed
Legal Topics
Input Tax Deduction, Tax Avoidance Schemes, Employment Rewards, Business Purpose Test
Tax Law VAT Input Tax Deduction Tax Avoidance Schemes Employment Rewards Business Purpose Test

Case Brief

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Parties

Taylor Pearson (Construction) Ltd

Appellant

The Commissioners for Her Majesty’s Revenue & Customs

Respondents

Procedural Posture

VAT Assessment Appeal / First Tier Tribunal (tax Chamber) Decision

Legal Issues

  1. 1 Whether VAT on fees for design of tax avoidance scheme for paying directors’ bonuses is deductible as input tax
  2. 2 Whether services were used for the purposes of the business within s24 VATA 1994
  3. 3 Whether services had a direct and immediate link with exempt supplies (issue of share capital)

Ratio Decidendi

The services were used for the purposes of the company’s business, specifically to incentivise employees in a tax-efficient manner, and did not have a direct and immediate connection with the issue of share capital (an exempt supply). Therefore, input VAT on the tax advice fees was deductible.

Court Disposition

Appeal allowed

Orders

  • Assessment for £9,970.00 VAT is discharged; input VAT on tax advice fees is deductible.