Norseman – UK Upper Tribunal finds that failure of a holding company to charge fees for its management services resulted in the loss of VAT credits

A UK holding company that failed to follow through on its intention to recover its head office expenses from its Australian mining subsidiaries because they were running at a loss was denied credits for its VAT costs as it was thereby not making taxable supplies to them. Although VAT credits were available where no current taxable supplies were being made, if the costs were being incurred for a future undertaking of making taxable supplies, that was quite different from the situation here where services were currently being supplied to the subsidiaries for no consideration. Charging a “nominal amount” of £100 per annum also would not have worked.

Similar issues would arise in this situation under ETA s. 141.01(2).

Neal Armstrong. Summary of Norseman Gold plc v Revenue and Customs Commissioners, [2016] BVC 504 (UKUT) under ETA s. 141.01(2).