Summary 

The overall issue in this appeal was whether the appellant was entitled to deduct input VAT in relation to services provided by tax advisers as to how the company might reduce its tax and NIC liabilities in rewarding its directors and reduce the income tax liabilities of those directors. There were two specific issues: 

• whether the services supplied were used for the purpose of the company’s business within the meaning of VATA 1994, s 24; and 
• whether the services supplied did not have a direct and immediate link with taxable output supplies because they had a direct and immediate link with exempt supplies, being the issue of share capital in the company. 

Background

The ordinary