Input tax recovery: BAA fails to take off in the Court of Appeal
In the Court of Appeal, BAA Ltd has lost its battle to recover £6.7m of input tax incurred by a special purchase vehicle (SPV) during the course of its takeover of BAA Plc. The SPV was found not to be engaged in ‘economic activity’ for the purposes of VAT, at the time that it incurred the liability to pay VAT on professional services. In addition, it was emphasised that automatic VAT recovery for an SPV holding company should not be assumed as the acquisition and holding of shares is not sufficient to constitute economic activity for the purposes of VAT.
Airport Development and Investments Limited (ADIL) was established to facilitate the takeover of BAA plc (BAA) by the Spanish group Ferrovial. The purpose of ADIL was to acquire the entire share capital of BAA with a view to managing and operating the group business of BAA, namely the running of UK and international airports, on an ongoing basis.
ADIL was incorporated in March 2006. During the course of the takeover, ADIL sought and obtained both legal and financial advice, thus incurring input tax, at a time when ADIL was not registered for VAT. The takeover completed in June 2006 and ADIL subsequently joined the BAA VAT group. As the representative VAT member of the BAA VAT group, BAA Ltd sought to recover the input tax on professional fees incurred by ADIL prior to completion of the takeover. This was on the basis that the input tax incurred should be offset against the output tax on the taxable supplies made by the BAA VAT group. HMRC refused recovery…
If you are registered and logged in to the site, click on the link below to read the rest of the Nabarro briefing. If not, please register or sign in with your details below.
Click on the link above to download this briefing.
News from Nabarro
News from The Lawyer
Briefings from Nabarro
When undertaking due diligence exercises in property purchases, a standard construction enquiry is usually raised of the seller to ask if there is a health and safety file.
This article focuses on the reforms affecting the generation of electricity, which is a regulated sector in the UK and the EU.
Analysis from The Lawyer
Nabarro senior partner and self-confessed “IT geek” Graham Stedman is heralding a major set of investments in technology ahead of the firm’s move to 125 London Wall this year.
Clients are more willing to bring claims against professional service providers but the risk to defendants is not as dramatic as it might seem