Taylor Pearson (Construction) v HMRC

In Taylor Pearson (Construction) v HMRC [2019] UKFTT 691 (6 December 2019) the FTT found that input tax on fees incurred in implementing a tax scheme to efficiently remunerate directors was deductible.

In March 2012 following a profitable trading year the company decided to reward its three directors with bonuses of £50 000. The company engaged a tax adviser to do so in a tax effective way. The fee was 11.5% of the total amounts paid to the directors. The scheme devised by the tax advisers included an issue of shares to the directors.

The issue was whether the company was entitled to deduct input VAT in relation to the services provided by the tax advisers. The two specific issues were whether the services supplied were used for the purpose of the company’s business (VATA 1994 s 26) and whether the services...