In Doran Bros (London) Limited v HMRC [2017] TC 05554 the First Tier Tribunal (FTT) found that input VAT on tax advice which also benefitted a director was recoverable.

  • The taxpayer is a company in the building sector.
  • They received tax advice regarding setting up an employee benefit trust (EBT) with investment gold for the benefit of their sole director / employee.
  • HMRC refused an input VAT claim on the grounds that the advice was for the personal benefit of the director and not linked to the company’s taxable supplies.

The FTT disagreed with HMRC and found that the input tax was recoverable:

  • Advice given to a taxable person on how it can reduce its tax and NICs liabilities in rewarding its employees is advice given for the purposes of the business.
  • The advice directly related to the company’s own tax and NIC liabilities, and the reduction in those would increase its profits.
  • The additional benefit to the director, even if considerable, did not allow a distinction to be drawn between this type of advice and payroll advice, or any other business expense.


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Case reference: Doran Bros (London) Limited v HMRC [2017] TC 05554