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In HMRC v Tower Resources PLC [2021] UKUT 0123, the Upper Tribunal (UT) rejected an appeal by HMRC that a holding company adding the fees for management services provided to subsidiaries to inter-company loans constituted taxable supplies for VAT.

On appeal to the FTT, upholding Tower Resources' Appeal, it considered three elements:

HMRC appealed to the UT on the basis that:

The UT, in dismissing all three of HMRC's grounds for appeal, agreed with the findings of the FTT that Tower Resources PLC was able to reclaim Input VAT in relation to Management services charged to subsidiaries. 

Useful guides on this topic

 Appeals: VAT
The process of making a VAT appeal largely follows that of direct taxes, however, there are some differences. How do I appeal an HMRC decision? How do I appeal a penalty? How can I request a Statutory Review?

How to appeal an HMRC decision
Disagree with a HMRC decision? How to appeal, what type of decision can you appeal, what are your different options when you disagree with HMRC? What are the key steps in making an appeal?

Groups: At a glance
Why form a group? What are the advantanges of a group? How to form a group?

Management recharges (holding companies)
When are intercompany charges subject to VAT? What rate of VAT applies to an intercompany charge? Is an intercompany charge a supply for VAT? Is there VAT on an intercompany payment for group relief?

Case Study 7: How to make a group
How to insert a holding company.

Place of supply: Services
The place of supply (POS) of a service determines whether the supply is within the scope of UK VAT and whether VAT is payable on that supply.

Partial exemption & input VAT
How do you calculate the amount of input tax you can recover under the VAT partial exemption rules? What are the de minimis rules?

External links

UT: HMRC v Tower Resources PLC [2021] UKUT 0123

FTT: Tower Resources PLC v HMRC [2019] TC7256


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