Commissioners for HM Revenue and Customs v Hotel La Tour Ltd

Commissioners for His Majesty's Revenue and Customs (Respondent) v Hotel La Tour Ltd (Appellant) Case ID: UKSC/2024/0086 https://www.supremecourt.uk/cases/uks... Hearing date: 4 June 2025 Session: Morning session [Session 1 of 4] On appeal from: [2024] EWCA Civ 564 Judgment date: 17 December 2025 Neutral citation: [2025] UKSC 46 Issue: Can Hotel La Tour Ltd recover the VAT on professional fees it incurred to assist with the sale of shares in its managed subsidiary, Hotel La Tour Birmingham Ltd? Facts: The appellant (“HLT”) owned all the share capital of Hotel La Tour Birmingham Ltd (“HLTB”), the lessee of a luxury hotel, and provided it with management services. In about mid-2015, HLT decided to construct and develop a new hotel in Milton Keynes. This was financed by selling HLTB and borrowing the shortfall from a bank. HLT and HLTB were in a value added tax (“VAT”) group at the time HLBT was sold. HLT engaged various third parties to provide professional services to assist with the share sale including market research, buyer shortlisting, financial modelling and tax compliance. HLT incurred professional fees of £382,900 plus £76,823 VAT. HLT filed its 09/17 VAT Return seeking repayment of the VAT on those professional fees (“input VAT”). His Majesty’s Revenue and Customs (“HMRC”) commenced enquiries and concluded that HLT was not entitled to repayment of that input VAT, upholding that conclusion on internal review. HLT appealed to the First-tier Tribunal (“FTT”). The FTT allowed the appeal, holding that the direct and immediate link was between the inputs and HLT’s taxable general economic activities and not with the exempt share sale. The input VAT was therefore deductible. The Upper Tribunal upheld the FTT’s conclusion on appeal. The Court of Appeal overturned the decisions of the FTT and UT and allowed HMRC’s appeal. HLT now appeals to the Supreme Court.