Date of taxable sales

The taxpayer was a property consultant who registered for VAT as a sole trader in March 2011 with expected sales of £75 000 in the next 12 months.

He claimed input tax on legal fees incurred in litigation against Manhattan Loft Corporation Ltd (MLCL). The dispute began in 1996 and concerned a finder’s fee for which the taxpayer believed he was entitled for finding a site at St Pancras Station for the refurbished St Pancras Hotel.

HMRC disallowed the claims because the costs were not relevant to the taxpayer’s VAT-registered business.

He argued that fees received should his claim be successful would be above the VAT registration threshold and require an output tax declaration giving him the basis for an input tax claim.

The Revenue maintained he was not a taxable person at the time the agreement with MLCL was made and there was no...