Input tax on costs of an awards ceremony

The taxpayer was VAT registered because it made taxable supplies of translating and interpretation services linked to the literary industry. It organised an awards ceremony at the House of Lords and claimed input tax on its March 2018 VAT return in relation to the costs. HMRC disallowed the claim.

The taxpayer appealed.

The First-tier Tribunal was satisfied that the taxpayer had funded the event and paid for the expenses therefore disagreeing with HMRC that the costs were incurred by a private individual rather than the taxpayer.

HMRC’s next contention was that if the academy did incur the costs they were not directly attributed to a taxable supply. The tribunal considered VATA 1994 s 26(2) and the need for supplies to be made ‘in the furtherance of … business’. It decided this test was not met - the ceremony was given for cultural rather than advertising reasons so there...