Victoria Oil & Gas plc v The Commissioners for HMRC

Facts

Victoria Oil & Gas plc (VOG) is the head company of an oil and gas group. It is now in administration. Its only revenue-generating subsidiary during the relevant period was Gaz du Cameroun (GdC), which operated the Logbaba project in Cameroon. It had other, largely non-productive subsidiaries. It was common ground that VOG made supplies of management and administration services to GdC for consideration in the course of an economic activity. Officer Hargun of HMRC began a pre-repayment check into VOG's return for period 01/22 in March 2022. VOG's finance controller initially said VOG made no taxable supplies. VOG's adviser later said it made supplies outside the scope of UK VAT with a right of recovery. HMRC accepted recovery only in respect of GdC and calculated a 12% recovery rate from VOG's own staff-time analyses. By a decision dated 31 January 2023, followed by assessments issued on 3 April 2023, HMRC restricted input tax for periods 01/19 to 07/22 (excluding 01/22) in a total sum of £884,049. HMRC upheld the assessments on review on 29 September 2023, and two ADR meetings followed. VOG appealed to the First-tier Tribunal (Tax Chamber). It argued that the assessments were not made to best judgment, that most of the input tax was directly attributable to supplies to GdC, and that in any event its business was wholly taxable.