The appellant appealed a decision of HMRC to disallow the recovery of input tax on legal fees on the grounds that they did not have a direct and immediate link to the making of taxable supplies by the appellant. 

The appellant’s main business activity is to invest in start-up businesses and to provide consultancy services to help them to reach their full potential and, hence, maximise their investment values.  

The appellant argued that the input tax could be claimed as these legal services were for the purpose of the business because the company was making a claim against the directors of Simplestream Limited and TV Player Limited, companies that they had invested in, for removing the director appointed by the appellant and then liquidating the companies. 

The appellant had suffered loss in that it had been denied the value of their shares in these two companies together with the dividend payments to which it would