![CA-2024-000806 - [2025] EWCA Civ 1259](https://backend.juristeca.com/files/emisores/logo_Sjvxvlx.png){kind=logo}
Legal Framework
Legal Framework
There is no dispute about the relevant law. At all times material to this appeal, the UK was a member of the European Union and EU law governed domestic VAT law.
EU law
Title X of Council Directive 2006/112/EC of 28 November 2006 (the “Principal VAT Directive”) deals with deductions. Chapter one of that title is headed “origin and scope of right to deduction”. Within that chapter, Article 168 provides that a taxable person is entitled to deduct input tax on goods and services used for the purposes of taxable transactions. Articles 169 and 170 extend that right of deduction to specific circumstances which are not in issue in this appeal.
Chapter two is headed “proportional deduction” and includes Articles 173 and 174 which direct the method by which the proportion of recoverable residual input tax is to be determined. Those articles are central to this appeal and provide, so far as relevant, as follows:
- Heading
- Lady Justice Whipple Introduction
- Legal Framework
- “ Article 173
- Article 174
- “ Article 176
- HCL’s Supplies
- HCL’s Proposed Floorspace Method
- Recoverable under Standard Method (£) Difference (£)
- Decision of the FtT
- Decision of the UT
- Issues
- Issue 2: was the UT right to remake the decision in favour of HMRC?
- Discussion
- Issue 3: how does the Input Tax Order apply in the context of residual input tax apportionment? Introduction
- Discussion
- Conclusions