Services supplied to whom?

In 2002 the taxpayer company was suffering financial problems. Various financial institutions that had loaned money to the company appointed PricewaterhouseCoopers (PwC) to carry out a review of the business.

The institutions PwC and the company entered into a tripartite agreement to do this with the company responsible for PwC's fees expenses and disbursements.

The company claimed the input tax on the costs in its VAT returns. HMRC refused the claim so the company appealed.

The First-tier Tribunal allowed the appeal so HMRC appealed arguing that the agreement provided for PwC to supply services to the institutions not the taxpayer.

The Upper Tribunal (Tax and Chancery Chamber) ruled that under the agreement the taxpayer paid PwC for supplying services to the institutions. The services were not something it could use in its business.

The effect of the agreement...