The Upper Tribunal upheld the decision of the First Tier Tribunal (FTT) that the appellant, Hotel La Tour was correct in treating the sale of its shares as being outside the scope of VAT rather than an exempt supply.

In 2015, Hotel La Tour raised funds to invest in a new hotel in Milton Keynes and decided to finance the project by selling its existing hotel in Birmingham. The development was expected to cost £34.5m and the shares in the subsidiary that owned the hotel were eventually sold to an unrelated buyer in 2017.

The consideration for the purchase of shares was £4,812,231.24, subject to adjustments in completion accounts. Upon the sale, the Birmingham subsidiary was removed from the hotel’s VAT group.