The First-tier Tribunal has handed down judgment in Compound Photonics Group Limited v HMRC [2026] UKFTT 985, a VAT case concerning input tax recovery. The taxpayer company had sold its UK business in 2017, but was seeking to recover input tax on ongoing expenses. The FTT held that the company had not engaged in, or intended to engage in, economic activity following the sale of the business, such that that it was not entitled to recover input tax. The only exception was for expenses relating to the sale of the company’s residual IP in 2022, which was treated as an aspect of the termination of the business, and therefore as part of its previous economic activity.
Laura Inglis and Rajkiran Arhestey acted for HMRC.
