HMRC loses sight of argument in Koolmove case

In this First Tier Tribunal case, the appellant Koolmove Ltd appealed against the denial by HMRC of amounts of input VAT claimed for pre-incorporation legal services. Aleem Islan, technical consultation manager at AAT, examines the ruling and the reasons for HMRC’s loss of the case

In Koolmove Limited v The Commissioners for HMRC [2019] UKFTT 0502 (TC) at the First Tier Tribunal (FTT), Derek McKee, a skilled software programmer, was the sole director and shareholder of Koolmove Ltd (the appellant) and was disputing a VAT claim rejected by HMRC.

HMRC contended that the legal services in question were supplied by Russell-Cooke LLP (solicitors) to Derek McKee, a skilled software programmer, in his personal capacity to defend an action brought against him by Jumar Solutions Ltd (Jumar), all of which occurred prior to the incorporation of Koolmove Ltd. Therefore, the input VAT for the legal services could not be claimed by Koolmove Ltd, HMRC argued.

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