Hotel La Tour claimed that it was entitled to recover VAT of £76,822.95 on the professional fees incurred when selling shares in a property owned by the group to raise capital for future projects.

After two tilts at HMRC in the First Tier and Upper Tribunal, the Court of Appeal departed from the reason in the lower courts and concluded that the ultimate purpose for the share sale was irrelevant after a two-day hearing last month, ruling in favour of HMRC. 

The Court of Appeal held that the costs had a direct link to the exempt supply of shares and therefore the input tax recovery was blocked.