The UT dismissed the appeal and reaffirmed that input tax is recoverable in these circumstances. In particular, the UT considered Kretztechnik C-465/03, in which the CJEU confirmed that it was possible to recover input tax as a general overhead in circumstances where that input tax had been incurred in relation to a transaction which was outside the scope of VAT. The CJEU applied the principle of fiscal neutrality to conclude that if a taxpayer is able to deduct input tax in relation to transactions which are outside the scope of VAT (such as share issues) they should also be able to deduct input tax in relation to exempt supplies (such as share sales).
Source: rpc.co.uk
