In the case of Malde v HMRC the First-tier Tribunal dismissed the Appellant’s appeal against HMRCs refusal to allow input tax to be reclaimed in relation to legal fees incurred by a sole trader where the input tax the individual had incurred in dealing with a freezing order related to the issue of personal liability notices. The input tax was for legal fees and HMRC said that the VAT that had been reclaimed had nothing to do with the supplies the sole trader usually made in the course of his business. This is a lesson for all those that trade in their own name that the input tax you recover on your VAT returns must relate to the supplies that you make and upon which you declare output tax.

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