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Airport Development and Investments Ltd (ADIL; now BAA Ltd) was the acquisition vehicle in a takeover bid for BAA plc by a Spanish group F.
It incurred substantial professional fees in connection with the takeover and paid VAT on the fees. After the takeover ADIL joined the BAA VAT group. The group claimed the input tax on the fees.
HMRC refused the claim saying there was no direct or immediate link between the VAT incurred by ADIL and any taxable supplies made by the BAA VAT group.
The company appealed and the First-tier Tribunal allowed the appeal.
HMRC appealed.
The Upper Tribunal (Tax and Chancery Chamber) judge said BAA’s taxable supplies were not attributable to ADIL because the latter was not a member of the BAA VAT group when it incurred the input tax.
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