Fees are relevant

The taxpayer company a registered social landlord provided social housing.

Up to 2006 it had carried out construction projects itself paying VAT in respect of the fees of various service providers.

As the provision of social housing for rent involved the taxpayer making exempt supplies it could not recover the input tax.

In 2006 the company set up V a wholly owned subsidiary to deal with future developments and also transferred to V existing projects.

It charged V a sum representing the professional fees it had already paid in relation to the transferred projects and then claimed the input VAT on the amount.

HMRC rejected the claim and the VAT tribunal dismissed the taxpayer’s subsequent appeal.

Mr Justice Sales in the High Court disagreed with the VAT tribunal. He said that the assignment by the taxpayer to V of...