Hotel La Tour loses at the Supreme Court

The case was heard before the Supreme Court on 24th–26th June 2025, making this much-anticipated judgment one of the most closely watched VAT cases in recent years. 

What the case was about

Hotel La Tour sold its Birmingham hotel by disposing of the shares in the company that owned it. The transaction raised capital for a new hotel development in Milton Keynes. They incurred around £76,000 in legal and advisory fees, including VAT, and sought to recover that VAT on the basis that the funds were used for a taxable project. 

The Supreme Court has now ruled that VAT on such fees remains tied to the exempt share sale itself, meaning it cannot be reclaimed, regardless of how the funds are used afterwards.

Why this matters

While this decision closes the door on broad VAT recovery for share disposals, it also highlights the complexity, and in some cases, the narrowness, of HMRC’s approach. Businesses should review whether any share-related transactions have led to VAT being incorrectly claimed, as HMRC may take an interest in ensuring adjustments are made.

How Gravita can help

Our VAT team can: 

• Review past transactions to ensure VAT treatment aligns with this final judgment 

• Assist in correcting any input VAT already claimed to minimise the risk of penalties or interest 

• Provide guidance on structuring future transactions to avoid unexpected VAT exposures 

Although the Supreme Court has ruled in HMRC’s favour, this area remains one where careful review and expert advice can protect businesses from unnecessary costs or risks.