The director of the taxpayer claimed that the company had two activities: investment management of hedge funds and advisory consulting and investment research on an hourly daily or fixed fee basis. No income had yet been generated by the first activity. The taxpayer claimed that the company passed all six Lord Fisher ([1981] STC 238) business tests in HMRC’s guidance on business and non-business activities and had the status of an intending trader throughout the periods in question.
Between May 2012 and January 2020 the company had introduced 19 potential investors to a single client but had not accounted for significant output tax on fees received.
HMRC raised an assessment or adjusted VAT returns between March 2015 and June 2020 to disallow input tax claimed by the company and also charged a careless penalty (FA 2007 Sch 24). The basis of this action...
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