HMRC ALLOWS VAT RECOVERY ON LIBEL CASE LEGAL FEES

Keith Miller Associate VAT Director keith.miller@etctax.co.uk

Our client is a well-known celebrity who manages their image rights though a limited company.

Their limited company is VAT registered, accounts for VAT on income received from advertising contracts and personal appearances, etc, and recovers VAT on related costs. Significant amounts of VAT were incurred on legal costs defending the client against defamatory accusations. We argued that the VAT on the legal costs was fully recoverable by the rights company because the legal defence was essential to maintain the good name of the brand and thus further the image rights company’s taxable business. Having initially suspended the client’s VAT claims, HMRC ultimately agreed with our arguments and refunded our client’s VAT claim.

Next steps – If you have any VAT queries please do get in touch.