Tower Resources has announced that it has won its First-Tier Tax Tribunal (FTT) appeal against HMRC’s 2016 decisions to deny the company credit for input VAT.
HMRC argued that the group was not making taxable supplies for consideration to its subsidiaries.
The group were therefore denied credit for input tax in the amount of over £600,000 for VAT periods 2014 to 2015, and issued an assessment for input tax previously claimed in the amount of £842,850 for VAT periods 2012 to 2014.
However, the company successfully appealed this decision on 8 July 2019 to which HMRC appealed against the decision suggesting that if Tower was making such supplies then it was not doing so in the course of an “economic activity”.
In the latest court hearing, The FTT rejected both arguments and held that Tower was both making taxable supplies for consideration and doing so in the course of an economic activity.
Justice Bacon and Judge Cannan said: “The provision of funding by a parent company to its subsidiaries through debt and/or equity is standard commercial practice.
“There was, however, no suggestion that this had any relevance to the question of whether the management services provided by that same parent company were to be regarded as economic activities. We therefore dismiss the third ground of appeal.”