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Keith Gordon looks at a case which considers the recoverability of input tax incurred on legal costs

Background

As most readers will know, a VAT-registered business is required to account to HMRC for the VAT that it charges its customers (output tax), but (in most cases, at least) can claim a credit for the VAT has incurred on its own purchases (input tax). Usually, there is little dispute as to what input tax may be claimed. However, one common area of difficulty is where a third party is introduced to the factual mix. This was at the heart of the recent case Praesto Consulting UK Ltd v HRMC [2019] EWCA Civ 353.