The FTT considered entitlement to input tax recovery for supplies made by an associated company that had not paid the output tax, and refused the claim.
The parent company charged the appellant company management fees that were subject to VAT at the standard rate. The parent company failed to account for the VAT, which was claimed by the appellant company as input tax. After less than a year of operation, the parent company went into liquidation.
Source Smith and Williamson
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