Jurisdiction(s):
United Kingdom

FTT (UK VAT): Product photography input tax recoverable as attributable to taxable goods, not residual; no direct link to exempt finance—Littlewoods v HMRC; N Brown distinguished.

Published on: 14 January 2026

Published by a LexisNexis Tax expert

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Littlewoods Ltd v HMRC [2025] UKFTT 1602 (TC)

The taxpayer traded in retail goods, while its model also depended on offering credit to customers, often to uplift the ticket price of items that would otherwise be out of reach. HMRC contended that VAT incurred on photography expenses—such as product images deployed on the Appellant’s website to drive sales—had a connection not only with the taxable supply of goods but also with exempt financing supplies. On that basis, HMRC said the related input tax should be treated as a residual cost within the partial exemption methodology. The Appellant maintained that those photography outlays were attributable solely to the taxable sale of goods for the purposes of the partial exemption calculation. In its view, the photography costs concerned only taxable goods sales...

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