In Heating Plumbing Supplies Ltd v HMRC [2016] TC05480 the First Tier Tribunal (FTT) allowed input VAT recovery on a management buyout.

  • The management and staff of Heating Plumbing Supplies Ltd (HPS) made a management buy out using a new holding company, Heating Plumbing Supplies Group Ltd (HPSGL).
  • Following the buyout HPS’s individual VAT registration was cancelled to set up a VAT group with HPSGL.
  • HPS claimed £12,226 input VAT as representative member of the VAT Group relating to professional advice in connection with the buyout.  Invoices were addressed to and paid by HPSGL.

HMRC decided that HPSGL had not made any supplies within or outside the VAT Group since registration and disallowed the claim.

The Tribunal allowed the claim, finding that:

  • Supplies made to HPSGL are treated as made to HPS as the representative member of the VAT group.
  • The services were provided for the purpose of furthering the business so there was a direct link between the services provided and the business of the VAT group.
  • The business of HPS, and therefore the wider VAT group, consists of making taxable supplies so the input tax is recoverable.

The appeal was allowed.


Case reference: Heating Plumbing Supplies Ltd v HMRC [2016] UKFTT TC05480

Subscriber guide: VAT groups