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Is BLP history? The view from Hotel La Tour

The Upper Tribunal’s decision in Hotel La Tour feels right and yet somehow also counter-intuitive, writes Etienne Wong (Old Square Tax Chambers).

Hotel La Tour Ltd v HMRC concerned a holding company that sold a subsidiary in order to raise financing for a new project. The entirety of the sale proceeds was applied towards the project. As we will see later this is material from the VAT perspective. Also similarly material is the fact that until the sale the taxpayer had provided the subsidiary with ‘management services’.

To assist in the sale the taxpayer engaged advisers and incurred VAT on professional fees. It sought to recover such VAT from HMRC and was denied. The dispute between the two led to the tribunal with the taxpayer prevailing at the First-tier and prevailing again at the Upper Tribunal ([2023] UKUT 178 (TCC)).

Unless HMRC prevails...

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