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Claim for deduction of input tax

The taxpayer was a UK parent company of a group that carried out gold mining activities in Australia. The taxpayer was registered for VAT under the classification for management consultancy and claimed input tax on UK expenses. HMRC refused the claim on the basis that the taxpayer had not been carrying on economic activity because it had not been making nor did it have an intention to make supplies for consideration for VAT purposes.

The First-tier Tribunal dismissed the taxpayer’s appeal.

The Upper Tribunal said the main issue was whether the supplies made by the taxpayer to its subsidiaries had been for consideration within the meaning of art 2(1) of the Principal VAT Directive and VATA 1994 s 5(2).

Mr Justice Warren said the supplies had not been made for consideration; they had been made gratuitously. The taxpayer had agreed that...