Company Allowed to Reclaim VAT Linked to Tax-Reducing Strategy

A U.K. company has won the right to reclaim value-added tax on fees linked to advice it received on designing a tax-avoidance strategy.

The First Tier Tribunal Court ruled Nov. 20 that Taylor Pearson (Construction) Ltd. can deduct 9,970 pounds ($12,875) in input VAT—overhead costs incurred in providing products and services—denied by Her Majesty’s Revenue and Customs.

• The company sought to deduct the input VAT for fees it paid to get advice on reducing tax and national insurance contributions liabilities of directors receiving benefits such as bonuses and shares.
• Under VAT rules, if the final product purchased ...