hotel la tour upper tribunal

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• Tax and Chancery tribunal decisions

THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMS v HOTEL LA TOUR LTD [2023] UKUT 00178 (TCC)

Upper Tribunal Tax and Chancery decision of Mr Justice Zacaroli and Judge Guy Brannan on 24 July 2023

Read full decision in Hotel La Tour Final decision (002)

VAT – sale of shares – proceeds of sale used to fund taxable activities – input tax incurred on sale of shares – whether a direct and immediate link to the taxable activities – yes – appeal dismissed

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Taxpayer Succeeds In Upper Tribunal Case Providing Opportunities For Increased Vat Recovery On Transaction And Corporate Restructuring Costs

The recent Upper Tribunal (UT) decision in the case of The Commissioners For His Majesty’s Revenue And Customs v Hotel La Tour Ltd [2023] UKUT 00178 (TCC) upheld the First-tier Tribunal (FTT) decision in 2021. Both Tribunals’ decisions were in favour of the taxpayer on the core issue of whether the sale of shares by an active holding company, which were demonstrably intended to generate proceeds to reinvest into a taxable business, constituted overhead costs of the business. As a result, the VAT incurred on sell-side costs was recoverable. 

In particular, the UT considered whether the costs incurred on Hotel La Tour Ltd (HLT)’s disposal of its subsidiary were directly and immediately linked to an exempt share sale (with no right to recover input VAT); or directly and immediately linked to HLT’s wider taxable business (via the VAT group), on the basis that the shares were sold to raise funds to build a new hotel and make downstream taxable supplies. 

The recovery of VAT on transaction costs is a contentious area for VAT and subject to HMRC scrutiny. This case emphasises the benefit of ensuring intentions are well documented in the event that HMRC should challenge the position.

The case will be of interest to other taxable businesses either intending to divest or dispose of a subsidiary company as a capital raising exercise or have already done so within the last 4 years. There is an opportunity here to support VAT recovery in relation to future sales and consider the scope for retrospective claims where VAT has previously been blocked from recovery. 

WHAT WERE THE CIRCUMSTANCES OF THE CASE?

HLT was a holding company and representative member of a VAT group which owned 100% of the share capital of Hotel La Tour Birmingham Ltd (HLTB), a member of the same VAT Group. HLT provided management services to HLTB which in turn operated a luxury hotel in Birmingham. In order to fund the construction of a new hotel in Milton Keynes, alongside a bank loan, HLT decided to sell HLTB. 

The sale completed in 2017 and HLT removed HLTB from the VAT group. The development of the Milton Keynes hotel began and the FTT found, as a matter of fact based on the strong evidence provided, that all the proceeds from the sale of HLTB were used towards funding the development/ construction. 

However, the issue arose when HLT sought to recover VAT of c.£70K on professional fees incurred in relation to the sale within its September 2017 VAT return. HMRC subsequently challenged the recovery of this input tax and raised a VAT assessment on the basis that the costs had a direct and immediate link to an exempt supply of a sale of shares, rather than looking through the transaction as a means of funding downstream making taxable supplies by the VAT group. 

WHY DID HMRC TAKE THE VIEW THAT THE COSTS WERE IRRECOVERABLE?

HMRC’s long-standing approach, supported by the Court of Justice of the European Union (CJEU) judgment in BLP Group PLC (C-4/94) (BLP) , has been that the sale of shares is exempt for VAT purposes. Consequently, any VAT incurred on costs that can be directly attributed to an exempt supply, is irrecoverable. HMRC’s position, based on the BLP judgment, is that this should not be modified even where the purpose of the sale is to fundraise for a taxable activity. HMRC argued that the services were: 

“…purchased in order to maximise the price of the shares; funded by the proceeds of the sale rather than by the profits of any taxable output transaction; and the profits of the sale were used for purposes including paying off HLTB’s loan.” 

The FTT agreed that the proceeds of the sale were used to purchase the services but noted that this meant that the amount available for taxable transactions reduced, hence the services were a cost of the taxable transactions. 

Nevertheless, HMRC appealed to the UT and contended the FTT had applied the wrong test to determine whether there was a direct and immediate link between the services and the sale of shares. 

WHY DID THE FTT AND UT AGREE WITH THE TAXPAYER?

The FTT explored the case law available, in particular how the CJEU and UK Courts had moved away from the now 28-year-old BLP judgment, and ultimately disagreed with HMRC’s view of the law that the VAT recovery position should not be modified for fundraising transactions, i.e. a look through is possible. 

Both the FTT and UT cited the more recent case law which enabled VAT recovery in relation to transactions that were outside the scope of UK VAT, on the basis that the costs constituted general overheads of the taxable business. Overall, the UT recognised that the distinction should not be whether the share sale is exempt or outside the scope of VAT; the concern is, on the basis of evidence provided and facts found by the FTT, the ultimate purpose of the share sale and whether this is to support the wider economic activity of the business.

The downstream taxable activity of HLT (i.e., the construction, development, and management of the Milton Keynes hotel) was never in dispute based on the facts agreed between the parties and found by the FTT and thus, the UT dismissed HMRC’s appeal. 

WHAT CAN SELLERS DO TO ENSURE THEY MAXIMISE VAT RECOVERY ON SELL-SIDE COSTS?

Recovery of VAT on sell-side costs is a contentious area of VAT and may continue to be so. However, the decision of the UT has precedent value and provides an insight into steps to take for best practice, particularly in documenting a sufficient audit trail or defence file.

Currently, the prudent position on recovery of VAT on sell-side costs is that VAT is irrecoverable and costs should be grossed up to include irrecoverable VAT for the purposes of working capital. HMRC guidance does provide an exception in the following statement, however we note this guidance appears inconsistent and does not have force of law: 

“The VAT on costs incurred by the target of an acquisition, such as vendor due diligence costs, may also be deductible provided it can be shown that the target is the recipient of the supplies in question and those supplies were received for the purposes of the business carried out by the target.”

Generally, this guidance is used to seek VAT recovery on costs where it can be demonstrated that the services purchased provide an ‘enduring benefit’ to the entity/ entities being sold (the Target), where the Target is receiving and using such services. VAT recovery on costs incurred only for the purpose of the sale, for example data room costs and legal fees in relation to the sale and purchase agreement, is typically blocked in full. 

This case provides another option whereby the ability to track the use and intention of the funds/proceeds, to the extent they will be reinvested back into the business, could enhance the VAT recovery position for businesses. 

IS THERE ANYTHING ELSE TO CONSIDER IN RELATION TO VAT RECOVERY ON SELL-SIDE COSTS?

We note that VAT recovery on transaction costs is, and will continue to be, an area subject to challenge by tax authorities in the UK and EU and case law. Only last month, the Dutch Court ruled that private equity investment funds are not entitled to recover VAT on such costs. 

Whilst this particular case of HLT may not be relevant to private equity funds in the UK, on the basis that this was corporate acquisition, it is important to understand the guidance and case law available in this area, to ensure VAT leakage is minimised. To the extent that certain actions are taken in a timely manner, and sufficient documentary evidence is obtained at relevant stages, VAT recovery on at least a portion of sell-side costs may be achievable for taxable businesses. 

The A&M Indirect Tax team has a wealth of experience in this area to support businesses in getting everything in place and present a sufficient basis for recovery to HMRC.

HOW CAN A&M HELP?

The outcome of this case could have a significant impact for corporate clients involved in the divesting of entities in the corporate group by way of selling of shares to fund the wider business activity. The fact pattern appears to be one that can capture a wide range of businesses that could benefit from increased VAT recovery, therefore raising increased capital to reinvest as intended. 

We see this opportunity applying not only to businesses considering prospective restructuring, divesting or disposing of companies to raise funds in the future, but also retrospectively by reviewing the VAT recovery position on historic transactions.

To the extent sell-side costs have been incurred and recovered within the last 4 years (i.e., the VAT statute of limitations) there is now scope to put in place a defence file to support VAT previously recovered. Alternatively, there may also be scope to submit a claim for VAT that was not previously recovered, and as a result of the principles of case, it may now be possible to do so. 

Please contact Mairead Warren de Burca , Mark McKay , or your regular A&M contact, to discuss further.

USEFUL HMRC LINKS

VIT40600 - When is VAT recoverable by holding companies - HMRC internal manual - GOV.UK (www.gov.uk)  

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Transaction & Corporate Restructuring – Opportunity for increased VAT recovery on costs

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HM Revenue and Customs (appellant) v Hotel La Tour Ltd (respondent)

Wednesday 10 – thursday 11 april 2024.

By Appellant’s Notice filed on 28 September 2023, the Appellant seeks to appeal the decision, dated 24 July 2023 of the Upper Tribunal Tax and Chancery Chamber.

Background (summary):

1. The matter came before the Upper Tribunal as an appeal by HMRC against a decision of the First Tier Tribunal (FTT). 2. The FTT had allowed an appeal by the Respondent tax payer against a decision of HMRC, and corresponding assessment, which was made on the basis that the Respondent was not entitled to an input deduction in respect of certain services supplied to the Respondent because, in HMRC’s view they were directly and immediately linked to the Respondent’s exempt supplies. 3. The claimed deductions related to professional fees paid in respect of the sale of shares in a subsidiary company, the proceeds of which were to be used to develop a new hotel. 4. The FTT found that there was a direct and immediate link between the professional services and the Respondent’s downstream taxable general economic activities and the chain was not broken by the share sale – deciding that the general position that it was necessary to have a direct link between the input and output transaction was modified in fund-raising transactions, and allowed the appeal. 5. The Matter came before the UT which considered, and dismissed two grounds of appeal.

View hearing:

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HOTEL LA TOUR VAT CASE: INPUT TAX RECOVERY ALLOWED ON COSTS OF DISPOSAL OF SUBSIDIARY - JULY 2023

By Steve Chamberlain

July 27, 2023

Share article:

Since we first reported on this case in January 2022 HMRC has lost its Appeal to the Upper Tribunal. See here .

HMRC persisted in its argument that where funds are being raised for a specific purpose, it is not possible to look at the eventual purpose of the fundraising, when deciding whether VAT recovery on the costs of raising those funds is possible. Rather, you only look at the immediate supply to which a cost is linked. The sale of shares is VAT exempt, so according to HMRC, VAT on the fees charged by advisors working on the sale can only be exempt input tax.

The UT disagreed. One factor is that shares usually have a market value. In this case, HLT couldn’t increase the price for the shares to include the costs of paying its professional advisors. These costs therefore reduced the net proceeds of the sale, meaning that less was available to fund the downstream activities. The professional fees were thus “cost components” of the downstream activities, not the sale of the shares.

HMRC has yet to comment on its loss, and may Appeal further. But any business affected by this decision needs to bear in mind that potential claims are restricted to four years. Thus, waiting until the dust has finally settled could lead to a viable claim being out of time.

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Input VAT and share sales to raise funds

Input VAT incurred in connection with an exempt sale of shares to raise funds for a taxable business could be attributed to that taxable business.

The Upper Tribunal has endorsed the approach of the FTT in Hotel La Tour Ltd concerning the attribution of input VAT on costs associated with an exempt disposal of shares made for the purposes of raising funds for the broader taxable business: HMRC v Hotel La Tour Ltd [2023] UKUT 178. Provided that such costs do not form a cost component of the exempt supply of shares, there will be a direct and immediate link to the wider taxable activities enabling the input VAT to be recovered.

The Upper Tribunal considered that the FTT had applied the correct principles in considering that earlier case law, and in particular the 2019 Supreme Court decision in Frank A Smart , meant that it was possible to ignore the chain-breaking effect of the exempt supply of shares in a "fundraising" scenario such as this.

Hotel La Tour Ltd (HLT) was a holding company and owned the whole of the share capital of a subsidiary, HLTB, with which it formed a VAT group. HLTB owned and operated a hotel and HLT provided HLTB with management services.

In 2015, HLT decided to construct and develop a new hotel in Milton Keynes. It was anticipated that this would cost approximately £34.5m. Various finance options were considered but, ultimately, the preferred option was to sell HLTB and to borrow the remainder. Accordingly, HLT sought to obtain the highest price possible for the shares. It was clear from board meeting minutes that from the outset the proceeds of sale of HLTB were to be used to fund the Milton Keynes Development. HLTB was eventually sold in 2017, raising approximately £16m from both the purchase price of the shares and repayment of debt from HLTB. HLT then commenced the development of the hotel in Milton Keynes.

In the course of the sale of HLTB, HLT incurred significant professional fees including VAT on those fees. It sought to deduct that VAT but HMRC took the view that the VAT was directly and immediately linked with the exempt sale of shares in HLTB and denied deduction.

The FTT accepted HLT's appeal, holding that it was possible to ignore the chain-breaking effect of the exempt supply of shares in a "fundraising" scenario such as this, provided that the relevant costs were not incorporated in (and thus a cost component of) the initial exempt transaction.

Decision of the Upper Tribunal

Before the Upper Tribunal, HMRC argued that the correct approach to cases such as this, following the various CJEU and domestic cases, was a two stage approach:

• Stage 1: was there an output transaction to which the inputs were directly and immediately linked
• Stage 2: only if not, then consider whether there is a direct and immediate link to the general economic activity.

In particular, HMRC relied on the CJEU decision in BLP (where the CJEU held that there was no entitlement to an input VAT deduction on a share sale even where the ultimate purpose was the carrying out of taxable transactions) and Kretztechnik (which allowed a direct and immediate link to the wider business only where the intermediate transaction (an issue of shares) was outside the scope of VAT).

In a admirably concise decision, the Upper Tribunal has rejected HMRC's arguments and endorsed the approach of the FTT in this case. In particular, the Upper Tribunal agreed that it was clear from later decisions of the CJEU such as SKF and Sveda that the CJEU had moved away from the chain-breaking approach originally set out in BLP . Indeed, this had been recognised in recent decisions of the UK courts, such as Associated Newspapers [2017] STC 843 and Frank A Smart & Son [2019] UKSC 39.

The Upper Tribunal's analysis of the development of the CJEU's reasoning and jurisprudence since BLP was as follows:

• first, in Kretztechnik the CJEU concluded 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
• next, in SKF the CJEU grappled with the situation where essentially the same transactions could be either (1) outside the scope of VAT (sale of shares by pure holding company) or (2) exempt from VAT (sale of shares by holding company providing management services) but there was potentially a right to deduct input tax in (1) in accordance with Kretztechnik but, according to BLP , there was no right to deduct input tax in (2). The CJEU applied the principle of fiscal neutrality to extend the same treatment to what would otherwise be an exempt transaction (which would break the chain between the supply of services and a taxpayer's general economic activities). It did so by taking account of the ultimate economic purpose of the transaction.

This was why later UK cases had suggested that the CJEU had moved away from any disregard of the ultimate economic purpose of the expenditure and called into question the BLP decision.

The Upper Tribunal also noted that the approach put forward by HMRC was essentially the same approach put forward by the Advocate General in SKF and that the CJEU had rejected that approach.

In SKF , the CJEU held that the question whether VAT on the relevant costs were to be attributed to the immediate share sale transaction or the downstream transactions was to be determined by reference to whether the taxable inputs were incorporated into the price of the shares or amongst the cost components of the downstream transactions. On this point, the Upper Tribunal commented that "it would be unusual to see such costs being reflected in the price paid for the shares in a standard share sale agreement. This would particularly be the case where the price is ascertained by common share valuation techniques used for private companies, such as a multiple of earnings or net asset value. It would rarely be the case that the price of shares in a standard arm's length share sale would be determined on a "cost plus" basis (i.e. a margin above cost) or for the costs of the sale to be specified as a component of the price. Although the costs of fees incurred in relation to the disposal may (but not necessarily will) be paid out of the proceeds of sale, in most cases it is unlikely that the price itself will be influenced by the professional fees incurred by the seller."

As a result, the Upper Tribunal held that the FTT had been correct in its approach when it applied a modified approach adopted by the CJEU in SKF and as interpreted by the Supreme Court in Frank A Smart to the use of services for a fund raising transaction which is either outside the scope of VAT or exempt from VAT. In those circumstances, the intermediate transaction would not prevent a deduction of input VAT if the purpose of the fund-raising was to fund downstream economic activities (based on objective evidence), the funds are later used for taxable supplies and the cost of the services are cost components of the downstream taxable activities.  

The decision to ignore the chain-breaking effect of an exempt sale of shares in this case and accept that the application of the direct and immediate link test is to be modified in fundraising cases directly follows from the later decisions of the CJEU (such as SKF ) as applied by the 2019 judgment of the Supreme Court in Frank A Smart . Once that principle was accepted, it appeared clear on the evidence that the ultimate purpose of the sale was to raise funds from the taxable development and operation of a new hotel in Milton Keynes.

It should be noted that it is important that there is objective evidence as to the purpose of the fundraising activities. VAT is not a tax that operates according to the subjective intent of the taxpayer and as such there must be objective evidence that the funds raised are to be used for a wider economic activity in order to invoke the principle in this case

Although it was unnecessary to do so, the FTT also considered (and rejected) an alternative arguments put forward by HLT in this case. HLT argued that since it was VAT grouped with HLTB, the supplies of management were ignored and there was no economic activities carried out. As such, the sale of the shares was outside the scope of VAT rather than exempt and there was no exempt transaction to break the chain. The FTT rejected this argument on the basis that whilst the supplies between the VAT members were to be disregarded for VAT purposes, the existence of the activities as a whole were not. This was clear from cases such as  Intelligent Managed Services Ltd v HMRC . This argument was not considered by the Upper Tribunal.

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• Perspectives >
• Tax Take >

Upper Tribunal dismisses HMRC's appeal confirming that input tax is recoverable on fiscal neutrality grounds

11 October 2023. Published by Alexis Armitage , Senior Associate

In HMRC v Hotel La Tour Ltd [2023] UKUT 00178 (TCC), the Upper Tribunal (UT) has upheld the decision of the First-tier Tribunal (FTT) and dismissed HMRC's appeal, confirming that input VAT can be reclaimed on professional services fees incurred during a share sale, where the ultimate economic purpose was fundraising.

Hotel La Tour Ltd ( HLT ) was a holding company which owned the entire share capital of Hotel La Tour Birmingham Ltd ( HLTB ). HLTB owned and operated a luxury hotel in Birmingham and HLT provided management services and key personnel. Both companies were members of the same VAT group of which HLT was the representative member.

In 2015, HLT decided to construct a new hotel in Milton Keynes which was anticipated to cost £34.5 million. To finance this development, HLT decided to sell HLTB and borrow the balance from the bank. HLT received a net amount of £16 million from the sale of the shares in HLTB.

HLT engaged various advisers to provide professional services to assist in the sale of HLTB, including market research, buyer shortlisting, financial modelling and tax compliance. In total, HLT incurred £382,899.51 plus VAT of £76,822.95, in professional fees.

The entirety of the £16 million from the sale of shares was used in the development of the Milton Keynes hotel.

In November 2017, HLT filed its VAT return and sought recovery of the input VAT incurred on the professional fees incurred. By a decision letter dated 26 June 2018, HMRC disallowed the input tax in respect of the professional services. Although, initially, on different grounds, HMRC ultimately disallowed the input tax on the basis that the fees were incurred pursuant to making an exempt supply (sale of the shares in HLTB) rather than in making taxable supplies and therefore input tax could not be recovered. 

HLT appealed to the FTT.

FTT decision 

The appeal was allowed.

The question for the FTT to determine was essentially whether the relevant objective purpose of the professional services was for the initial fund-raising transaction (the sale of shares) or the purchase of the hotel in Milton Keynes.

HMRC argued that the professional services were used for the sale of shares which was an exempt supply and therefore input tax could not be recovered. The FTT disagreed and found that there was a direct and immediate link between the professional services and HLT's downstream taxable general economic activities. Accordingly, 'the chain' had not been broken by the sale of the shares in HLTB and input tax could be recovered.

Furthermore, the FTT was of the view that the relevant consideration in fund-raising cases was whether the cost of the services was incorporated into the price of the share transaction, or the downstream transactions. In this case, the cost was paid for out of the proceeds of the sale and therefore reduced the amount available for the taxable transactions and was therefore a cost of those transactions.

A copy of the FTT's decision can be viewed  here.

HMRC appealed to the UT.

UT decision

The appeal was dismissed.

In reaching its decision, 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).

A copy of the UT's decision can be viewed  here.

This decision will provide some certainty for businesses who incur VAT on costs pursuant to the sale of shares in similar circumstances. Following this decision, businesses should consider whether they have incurred irrecoverable VAT on such costs in the last four years as they may now be able to make a repayment claim. 

It is understood that HMRC has been granted permission to appeal and it will be interesting to see whether the Court of Appeal uphold the UT's decision. 

• VAT and Indirect Taxes

VAT recovery on deal costs – selling shares to fund ‘downstream’ taxable activity

VAT recovery on professional fees relating to raising funds for a business has been a much-debated topic over the years. There are many ways in which a business can raise funds, from raising business loans to selling assets, which could include shares in subsidiaries. There have been numerous cases taken to the VAT Courts on the VAT recovery of costs associated with this topic. The Upper Tier Tribunal has now released its judgement in the VAT case of Hotel La Tour which addresses the question of whether VAT on the costs of selling shares in a subsidiary to fund future development of the business elsewhere is recoverable.

Hotel La Tour Ltd (HLT) was the parent company operating a subsidiary Hotel La Tour Birmingham Ltd (HLTB). HLT had formed a VAT group with HLTB and acted as the representative member. HLTB owned and operated a luxury hotel in Birmingham under the name “Hotel La Tour”. HLT provided HLTB with management services and owned the right to the name “Hotel La Tour” together with other intellectual property (the domain name for the Hotel La Tour website, the Hotel La Tour logo, and agreements with two online booking agencies).

In 2015, HLT decided to construct and develop a new hotel in Milton Keynes at an estimated cost of £34m. Various options were considered to raise funds but ultimately the preference was to sell the shares in HLTB and to borrow the remainder from a bank (clear from board meeting minutes): the FTT accepted as fact that the whole of the net proceeds received from the sale of the shares in HLTB were used or are planned to be used towards the Milton Keynes hotel.

HLT claimed the VAT on its costs of selling HLTB, but HMRC denied the recovery on the basis that the sale of the shares was an exempt supply, and one cannot look beyond this immediate supply (based on precedent authority of the European Court of Justice in a case BLP from 1995).

The FTT decision

The key issue in the case was whether the services and the professional fees on which VAT was paid were directly and immediately linked to HLT’s exempt supply of shares or instead related to its downstream taxable activities.

The FTT held that more recent caselaw including the 2019 Supreme Court decision of Frank A Smart had indicated a different approach should be applied to fundraising costs, which requires an objective assessment of the intended use of the funds. The means of how those funds are obtained, whether it be a loan or by disposing of shares, should not impact the VAT recovery. However, this is not the case when the costs of the professional services are cost components of the share price (and the VAT then would be irrecoverable).

In this case, the FTT held, looking at objective evidence, that the purpose of the share sale was to fund HLT’s taxable downstream business activities - building, development and management of the Milton Keynes Development and evidence showed that the funds had been used wholly for this purpose. Additionally, the FTT held the costs were not cost components of the price of the shares but were  business overheads. Therefore, the VAT incurred on fees related to selling the shares was recoverable.

Alternative arguments put forward by HLT to support VAT recovery (around VAT grouping and a potential transfer of a going concern (TOGC)) were dismissed by the FTT. HMRC then sought and received permission to appeal the FTT decision to the Upper Tribunal (UTT).

The UTT decision

The UTT has dismissed HMRC’s appeal, rejecting HMRC’s arguments on the approach to attributing input tax and deciding that the FTT was correct to find a modified approach should be applied in fundraising transactions and could be applied to benefit HLT. As a result of this modified approach, there is an opportunity for businesses to make claims for input tax on services used for a fundraising transaction which is either VAT exempt or outside the scope of VAT if:

• The purpose in fundraising was to fund its economic activities; 
• The funds are later used for taxable supplies; and
• The cost of the services are cost components of downstream activities which are taxable. However, the right to deduct will be lost if the cost of the services is incorporated into the price of the shares. If the downstream activities are a combination of taxable transactions, exempt transactions and transactions outside the scope of VAT, the inputs will have to be apportioned.   

The UTT decision creates a legally binding precedent however HMRC have recently been granted permission to appeal the Upper Tribunal decision to the Court of Appeal, though the grounds of appeal are not known at this stage. A Revenue & Customs Brief has not been issued yet. Nevertheless, groups that have sold subsidiaries to raise finance for their wider business in the past four years should now consider whether VAT on costs of the sale can be recovered by the group in whole or in part.

Please note that any claim would need to be supported by documentary evidence that the purpose of the share sale was to fund downstream taxable activities.  

Get in touch

 For help and advice on all VAT issues related to raising finance for your business please get it touch with your local VAT contact or Martyne Pearson or Lyndon Firth .

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Author: Ed Saltmarsh

Published: 29 Sep 2023

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Ed Saltmarsh explores the consequences of the Hotel La Tour Upper Tribunal case regarding the recovery of VAT incurred on professional fees relating to a sale of shares.

As the sale of shares is an exempt supply, HMRC will generally seek to deny the recovery of VAT on professional fees related to the sale. However, Hotel La Tour is the latest in a string of cases demonstrating that VAT recovery may be possible where the money generated by the share sale is used to fund an expansion of the business’s taxable activity.

Where we started

BLP Group was a holding company that provided management services to a group of trading companies producing goods for use in furniture and DIY. By virtue of the taxable management charges made to its subsidiaries, BLP was fully taxable. However, in 1991 the company made an exempt disposal of shares in one of its subsidiaries. 

BLP incurred a significant amount of VAT on professional fees in connection with the transaction, which it tried to recover through its VAT return. It argued that as the purpose of the sale of shares was to raise funds so that it could continue its taxable trade, the VAT should have been recoverable.

However, HMRC denied the claim on the basis that the VAT incurred did not directly relate to its taxable supplies, but rather to the exempt share disposal. The case made its way through the courts, eventually reaching the Court of Justice of the European Union (CJEU) in 1995 (BLP Group v Commissioners of Customs & Excise (Case C-4/94) ).

This ‘direct and immediate link’ became a key test going forward when evaluating the right to recover VAT incurred on professional fees

The CJEU ultimately agreed with HMRC that there was no “direct and immediate link” between the professional fees incurred and the taxable supplies made by BLP. The fees were incurred in connection with the exempt sale of shares. This “direct and immediate link” became a key test going forward when evaluating the right to recover VAT incurred on professional fees.

HMRC has relied heavily on the BLP case in guiding its position on VAT recovery relating to professional fees. HMRC’s internal manuals aimed at its VAT officers still state that the BLP case: “confirmed that … the ultimate purpose of a business is irrelevant so it is only the immediate supply to which any input is a cost component that matters”.

This stance has come under scrutiny many times over the years with several cases challenging this view, including the 2019 case of Frank A Smart & Son Limited [2019] UKSC 39 . However, HMRC’s position may never have been under quite as much pressure as it is following a recent case.

Hotel La Tour

Hotel La Tour Limited (HLT) operates a chain of luxury hotels, each owned by a subsidiary company. In 2017, HLT sold the shares in an existing subsidiary to finance the construction of a new hotel in Milton Keynes.

HLT tried to recover £76,000 of VAT it had incurred on professional fees relating to the sale of shares. Following its usual stance off the back of the BLP decision, HMRC disallowed the input tax claim. HMRC argued that the professional services were used to make an exempt supply of shares.

HLT appealed, arguing that the fees were incurred in the process of raising funds to build the new hotel, which would generate taxable income for VAT purposes for HLT. 

The First-tier Tribunal (FTT) found in favour of HLT on the basis that there was a direct and immediate link between the costs incurred and HLT’s taxable business of the new hotel in Milton Keynes. 

However, permission to appeal was granted on the basis that the FTT had potentially: 

• erred in law and applied the wrong test for determining whether there was a direct and immediate link between the services and the sale of the shares; and 
• made a decision contrary to binding authority.

HMRC duly appealed to the Upper Tribunal (UT) but, on 24 July 2023, the UT ultimately came to the same conclusion as the FTT . The UT noted that, “the reasoning and jurisprudence of the CJEU has evolved considerably since BLP”. In particular, the UT referenced the CJEU cases of Kretztechnik (Case C-465/03) and AB SKF (Case C-29/08) .

In Kretztechnik, the CJEU concluded that it was possible to recover input tax as a general overhead in circumstances where the input tax was incurred in relation to a transaction that was outside the scope of VAT. In this case, the holding company did not provide management services to its subsidiary and so did not carry out any economic activity, leading to the sale of shares falling outside the scope of VAT.

In AB SKF , the CJEU grappled with the issue of fiscal neutrality as there was a right to deduct input tax in accordance with Kretztechnik but no right to deduct input tax according to BLP . In this case, the CJEU considered the ultimate economic purpose of the transaction.

Where are we now?

The 2019 UK Supreme Court decision in Frank A Smart , which was based on the principles set out by the CJEU in AB SKF, has also called the BLP decision into question by attributing expenditure on the raising of capital to the general overheads of the business.

That decision, combined with this decision in HLT, certainly casts doubt over whether BLP can or should still be relied upon by HMRC. It can no longer be assumed that selling shares automatically precludes a business from recovering VAT on the costs of the transaction.

It remains to be seen whether HMRC will appeal HLT to the Court of Appeal. Losing this case in the UT is a damaging blow to HMRC’s position regarding VAT recovery on professional fees and HMRC will want to rectify this. But will HMRC want to risk losing this case in a court of even higher standing?

It can no longer be assumed that selling shares automatically precludes a business from recovering VAT on the costs of the transaction

In the meantime, businesses that have incurred VAT in the last four years on costs relating to a sale of shares, where the money generated by the sale was used to fund an expansion of the business’s taxable activity, should consider whether they are able to submit a repayment claim to HMRC for underclaimed input tax. 

Repayment claims are usually made under s80, VAT Act 1994 . Claims such as this have specific requirements. Claims may fail where these requirements are not met.

As part of the claim, the taxpayer should make HMRC aware that any claim is on the back of – or, where relevant, pending the outcome of – the relevant litigation. 

Taxpayers and their agents should ensure that all correspondence from HMRC relating to the claim is read carefully and responded to accordingly. If HMRC rejects the claim and this is not appealed within the relevant time limits, the taxpayer could lose the opportunity to recover the VAT.

It may be tempting to read across from this case to similar scenarios where VAT has been incurred on deal fees. There is certainly no harm in reviewing the position of other fees incurred, and a claim in other scenarios may be successful. However, as ever with VAT, and particularly in this area, the position regarding VAT recovery will depend on the specific facts of a case. 

If in doubt, professional advice should be sought.

Ed Saltmarsh , VAT and Customs Manager, ICAEW

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Breaking the Chains: Landmark Tribunal Ruling Expands VAT Recovery Opportunities for Taxpayers

Glyn Edwards · September 13th 2023 · read

In a highly significant decision, the Upper Tribunal has dismissed HMRC’s appeal against the taxpayer’s First-tier Tribunal success in the case of HMRC v Hotel La Tour Limited [2023] UKUT 178.

The Facts of the Case

Hotel La Tour Ltd (“HLT”) incurred fees for professional services in respect of a sale of shares in its subsidiary Hotel La Tour Birmingham Ltd “HLTB”). HMRC disallowed HLT’s input tax claim on the basis that the sale of shares in HLTB was an exempt supply and the VAT on the professional services was directly and immediately linked therefore to the exempt sale of shares. HLT’s successful argument was that the relevant services were directly and immediately linked to HLT’s downstream taxable activities.

In 2015, HLT decided to construct and develop a new hotel in Milton Keynes, costing approximately £34.5 million. That construction was partly financed by the sale of HLTB - the proceeds of the sale were to be used to fund the Milton Keynes development. HLT engaged various companies to provide professional services, with a view to obtaining the highest sale price available, which would provide for the largest sum possible to pay towards the Milton Keynes development.

The Decision

The judgment challenges HMRC’s traditional view of input tax, which is that it must always be attributed to the first output in a chain and that, if the first output is VAT exempt, then the input tax is non-recoverable. That view has leant heavily on a very old judgment of the European Court of Justice in the case of BLP Group plc v Customs and Excise Commissioners - [1995] . HMRC still refer to that case in their guidance manuals for officers stating that “it confirmed that, as VAT is a transaction-based tax, the ultimate purpose of a business is irrelevant so it is only the immediate supply to which any input is a cost component that matters.”

That guidance is proven to be incorrect by the judgment of the Upper Tribunal in Hotel La Tour, which specifically stated that:

“….subsequent decisions of the CJEU had called the BLP decision into question in the light of its developing jurisprudence attributing input expenditure on the raising of capital to the general overheads of an undertaking. Although not formally overruled, the BLP decision can no longer be regarded as representing a complete statement of the CJEU’s jurisprudence in this area”.

Opportunities for Taxpayers

Whilst the decision might be appealed by HMRC, other taxpayers should take immediate action to consider whether they might benefit from this decision as potential claims are restricted to four years. The opportunity may be wider than cases on all fours with HLT and may expand to create VAT recovery whenever fund raising supports downstream taxable activities. This could have a positive impact, for example, on the charity sector, who have traditionally not been entitled to any VAT recovery on the costs of fund-raising events.

To discuss the issue further, please contact Glyn Edwards.

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Hotel granted the luxury of VAT recovery on a sale of shares to raise funds

11 january 2022.

Businesses involved in mergers and acquisitions are accustomed to jumping through the necessary hoops to confirm that they are entitled to recover VAT on the costs of acquiring a new subsidiary. However, a recent tribunal appeal has looked at a corporate finance transaction from the seller’s point of view, considering whether a holding company was eligible to reclaim VAT incurred in the course of selling the shares of a subsidiary company to a new owner. 

The Hotel La Tour case

Hotel La Tour Ltd is the holding company of a corporate group that operates a chain of luxury hotels, each of which was owned and run by a subsidiary company. In 2015, Hotel La Tour decided to build a new hotel in Milton Keynes, with the project to be financed by selling its existing hotel in Birmingham. The shares in the subsidiary that owned that hotel were eventually sold to an unrelated buyer in 2017.

A dispute arose with HMRC over Hotel La Tour’s entitlement to recover VAT of £76,000 that it had incurred on various professional services related to the sale of those shares, including the fees of its marketing agent, solicitor and tax advisers. HMRC disallowed VAT recovery on the basis that the professional services were used to make a supply of shares, on which VAT is not deductible because it is a VAT exempt supply. Hotel la Tour appealed, arguing that the fees were in fact the costs of raising funds to create the new hotel, which would be a taxable business for VAT purposes.

The First-tier Tax Tribunal has now found in favour of Hotel La Tour, deciding that the VAT was recoverable because there was a direct and immediate link between the costs incurred and its taxable business of building, developing and the eventual management of the new hotel in Milton Keynes. That link was not broken by the exempt share sale – for the professional fees to be attributable to the sale of the shares, the tribunal ruled that there must be a ‘cost component’ of the price of the shares. However, according to the tribunal, that was not the case here, because the shares were sold at their open market value, which was not influenced by how much Hotel La Tour had spent on the professional costs of the deal. Instead, the objective purpose of incurring the cost of the services was to raise funds to pay for the development of the Milton Keynes hotel.

What does this mean for other businesses?

The impact of this decision is not restricted to the hotel sector and could potentially allow any business to recover VAT on the costs of selling a subsidiary to raise funds to pursue another business activity that is taxable for VAT purposes. However, HMRC is very unlikely to accept the tribunal’s findings and may decide to appeal to the Upper Tribunal. The outcome was based on some new and relatively untested European case law that emerged just before the UK left the EU, so this issue may lead to a long and complex litigation before the position is firmly settled.

For now, businesses which did not claim VAT on the cost of a sale of shares in similar circumstances over the last four years should study the Hotel La Tour decision, look out for news of a further appeal and consider whether they should submit a protective claim to HMRC.

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Input VAT claimable on fund-raising share sale

In HMRC v Hotel La Tour Ltd [2023] UKUT 178 , the Upper Tribunal (UT) agreed with the First Tier Tribunal (FTT) that Input VAT can be reclaimed on professional services fees incurred during a share sale, where the ultimate economic purpose was fundraising.

• Hotel La Tour Ltd (HLT) owned a 100% subsidiary Hotel La Tour Birmingham (HLTB), which owned and operated a luxury hotel.
• HLT provided Management services to HLTB and both formed a VAT group .
• HLT wished to build a new hotel in Milton Keynes and separately a decision was taken that the Birmingham hotel could not be grown as a business any further within the group. 
• The shares in HLTB were subsequently sold and the proceeds used to fund the Milton Keynes build.
• Professional fees of approximately £383,000 were incurred, along with approximately £77,000 of Input VAT , that HLT reclaimed.
• HMRC refused the claim on the basis that as the sale of shares was exempt from VAT, it broke the direct and immediate link to taxable supplies.
• HLT Appealed to the FTT , who upheld the appeal on the basis that the direct and immediate link was not broken by the exempt transaction.
• HMRC appealed to the UT.

The UT considered the leading CJEU case, Skatteverket v AB SKF (Case C-29/08) [2010] STC 419 , which in turn was interpreted by the Supreme Court in the leading UK case, Frank A Smart & Son Ltd v HMRC [2019] UKSC 39 .  It held that the established principle in relation to the recoverability of Input VAT is now:

• There is a direct and immediate link between goods and services received and the goods and services provided by the business as part of its trade.
• There is a direct and immediate link between goods and services received and transactions that are outside of the scope of VAT. This was extended by the principle of fiscal neutrality to transactions that are exempt for VAT.
• The Input VAT is part of costs constituting general overheads when the transaction is part of the ultimate economic purpose of the business.

The UT held:

• HLT's purpose for the transactions were fundraising.
• The funds raised were later used for taxable supplies.
• The costs incurred were components of taxable downstream activities, not part of the price of the shares (which would rarely be the case).
• The direct and immediate link was not broken.
• The Input VAT was recoverable.

The appeal was dismissed.

As of September 2023, HMRC have been granted permission to take this to the Court of Appeal.

Useful guides on this topic

Share sale was actually a fundraising activity for taxable supplies In  Hotel La Tour Ltd v HMRC [2021] TC08335 , the First Tier Tribunal (FTT) found that the sale of a subsidiary was a means of fundraising that could be directly linked to future trading activities. This allowed the input VAT on associated professional fees to be reclaimed.

Input VAT: What constitutes a valid claim (& VAT invoice) What is Input VAT? Who can claim it? What is needed for a valid claim? What needs to be included on a VAT invoice and can you make a claim without one?

Management re-charges (holding companies) When are intercompany charges subject to VAT? What rate of VAT applies to an intercompany charge? Is an intercompany charge a supply for VAT? Is there VAT on an intercompany payment for group relief?

Groups What are the conditions for forming a VAT group? What rules apply once a VAT group is in place?

External links

HMRC v Hotel La Tour Ltd [2023] UKUT 178

Hotel La Tour Ltd v HMRC [2021] TC08335

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Was the First-tier Tribunal correct on Hotel La Tour?

25 January 2022 By Robert

The First-tier Tribunal recently published its decision in the appeal by Hotel La Tour Limited. You can find the decision on the BAILII website .

The First-tier Tribunal allowed the appeal. Did it reach the right decision? At the time of writing it is not known whether HMRC will appeal that decision. The decision links the recovery of input tax on the costs incurred in making a sale of shares, a supply that is usually exempt from VAT, to “downstream taxable activities”. This seems odd because it is usually accepted there is a “direct and immediate link” between the costs of selling shares and the sale. As the sale would have been exempt the input tax on the costs would appear to have a direct and immediate link to the exempt supply of shares, and thus be unrecoverable. The buyer was based in the UK.

However, Hotel La Tour Limited was using the sale of the shares in a subsidiary to finance the development of another hotel. The board of the company had considered a number of ways to finance the development and considered selling the shares in its subsidiary would be the best option. The discussions on this were recorded in the board meeting minutes. Did this help persuade the First-tier Tribunal that the input tax on the costs had a direct and immediate link to the anticipated taxable supplies to be made in the future?

Another point that the First-tier Tribunal considered was that the price at which the shares were sold did not take into account the costs of sale. Can one set a price for a commodity, like shares, taking into account all the costs involved? Wouldn’t the buyer only buy if the price was reasonable for the thing being purchased? It is not unusual for markets to set the price at which supplies are made, without any consideration for the costs incurred by the supplier: why is this different?

The First-tier Tribunal considered case law before reaching its decision, and concluded that there was no reason to consider the link to the sale of the shares was stronger than the link to the anticipated taxable supplies. If the link to exempt supplies is no stronger than that to future taxable supplies, should the input tax on the costs should be apportioned between taxable and exempt supplies?

Before you rush off to apply this decision, remember that decisions of the First-tier Tribunal are only binding on the appellant and HMRC. If HMRC decide to appeal to the Upper Tribunal, that decision will set a precedent that can relied on. And that is why HMRC may not appeal the decision: leaving it as it is prevents others from relying on it, whereas a decision of a higher Court could lead to claims being made for input tax previously considered to be unrecoverable in similar circumstances.

Please refer to the disclaimer .

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Downtown Moscow Hotels

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The Comprehensive Guide to Moscow Nightlife

• Posted on April 14, 2018 July 26, 2018
• by Kings of Russia
• 8 minute read

Moscow’s nightlife scene is thriving, and arguably one of the best the world has to offer – top-notch Russian women, coupled with a never-ending list of venues, Moscow has a little bit of something for everyone’s taste. Moscow nightlife is not for the faint of heart – and if you’re coming, you better be ready to go Friday and Saturday night into the early morning.

This comprehensive guide to Moscow nightlife will run you through the nuts and bolts of all you need to know about Moscow’s nightclubs and give you a solid blueprint to operate with during your time in Moscow.

What you need to know before hitting Moscow nightclubs

Prices in moscow nightlife.

Before you head out and start gaming all the sexy Moscow girls , we have to talk money first. Bring plenty because in Moscow you can never bring a big enough bankroll. Remember, you’re the man so making a fuzz of not paying a drink here or there will not go down well.

Luckily most Moscow clubs don’t do cover fees. Some electro clubs will charge 15-20$, depending on their lineup. There’s the odd club with a minimum spend of 20-30$, which you’ll drop on drinks easily. By and large, you can scope out the venues for free, which is a big plus.

Bottle service is a great deal in Moscow. At top-tier clubs, it starts at 1,000$. That’ll go a long way with premium vodka at 250$, especially if you have three or four guys chipping in. Not to mention that it’s a massive status boost for getting girls, especially at high-end clubs.

Without bottle service, you should estimate a budget of 100-150$ per night. That is if you drink a lot and hit the top clubs with the hottest girls. Scale down for less alcohol and more basic places.

Dress code & Face control

Door policy in Moscow is called “face control” and it’s always the guy behind the two gorillas that gives the green light if you’re in or out.

In Moscow nightlife there’s only one rule when it comes to dress codes:

You can never be underdressed.

People dress A LOT sharper than, say, in the US and that goes for both sexes. For high-end clubs, you definitely want to roll with a sharp blazer and a pocket square, not to mention dress shoes in tip-top condition. Those are the minimum requirements to level the playing field vis a vis with other sharply dressed guys that have a lot more money than you do. Unless you plan to hit explicit electro or underground clubs, which have their own dress code, you are always on the money with that style.

Getting in a Moscow club isn’t as hard as it seems: dress sharp, speak English at the door and look like you’re in the mood to spend all that money that you supposedly have (even if you don’t). That will open almost any door in Moscow’s nightlife for you.

Types of Moscow Nightclubs

In Moscow there are four types of clubs with the accompanying female clientele:

High-end clubs:

These are often crossovers between restaurants and clubs with lots of tables and very little space to dance. Heavy accent on bottle service most of the time but you can work the room from the bar as well. The hottest and most expensive girls in Moscow go there. Bring deep pockets and lots of self-confidence and you have a shot at swooping them.

Regular Mid-level clubs:

They probably resemble more what you’re used to in a nightclub: big dancefloors, stages and more space to roam around. Bottle service will make you stand out more but you can also do well without. You can find all types of girls but most will be in the 6-8 range. Your targets should always be the girls drinking and ideally in pairs. It’s impossible not to swoop if your game is at least half-decent.

Basic clubs/dive bars:

Usually spots with very cheap booze and lax face control. If you’re dressed too sharp and speak no Russian, you might attract the wrong type of attention so be vigilant. If you know the local scene you can swoop 6s and 7s almost at will. Usually students and girls from the suburbs.

Electro/underground clubs:

Home of the hipsters and creatives. Parties there don’t mean meeting girls and getting drunk but doing pills and spacing out to the music. Lots of attractive hipster girls if that is your niche. That is its own scene with a different dress code as well.

What time to go out in Moscow

Moscow nightlife starts late. Don’t show up at bars and preparty spots before 11pm because you’ll feel fairly alone. Peak time is between 1am and 3am. That is also the time of Moscow nightlife’s biggest nuisance: concerts by artists you won’t know and who only distract your girls from drinking and being gamed. From 4am to 6am the regular clubs are emptying out but plenty of people, women included, still hit up one of the many afterparty clubs. Those last till well past 10am.

As far as days go: Fridays and Saturdays are peak days. Thursday is an OK day, all other days are fairly weak and you have to know the right venues.

The Ultimate Moscow Nightclub List

Short disclaimer: I didn’t add basic and electro clubs since you’re coming for the girls, not for the music. This list will give you more options than you’ll be able to handle on a weekend.

Preparty – start here at 11PM

Classic restaurant club with lots of tables and a smallish bar and dancefloor. Come here between 11pm and 12am when the concert is over and they start with the actual party. Even early in the night tons of sexy women here, who lean slightly older (25 and up).

The second floor of the Ugolek restaurant is an extra bar with dim lights and house music tunes. Very small and cozy with a slight hipster vibe but generally draws plenty of attractive women too. A bit slower vibe than Valenok.

Very cool, spread-out venue that has a modern library theme. Not always full with people but when it is, it’s brimming with top-tier women. Slow vibe here and better for grabbing contacts and moving on.

High-end: err on the side of being too early rather than too late because of face control.

Secret Room

Probably the top venue at the moment in Moscow . Very small but wildly popular club, which is crammed with tables but always packed. They do parties on Thursdays and Sundays as well. This club has a hip-hop/high-end theme, meaning most girls are gold diggers, IG models, and tattooed hip hop chicks. Very unfavorable logistics because there is almost no room no move inside the club but the party vibe makes it worth it. Strict face control.

Close to Secret Room and with a much more favorable and spacious three-part layout. This place attracts very hot women but also lots of ball busters and fakes that will leave you blue-balled. Come early because after 4am it starts getting empty fast. Electronic music.

A slightly kitsch restaurant club that plays Russian pop and is full of gold diggers, semi-pros, and men from the Caucasus republics. Thursday is the strongest night but that dynamic might be changing since Secret Room opened its doors. You can swoop here but it will be a struggle.

Mid-level: your sweet spot in terms of ease and attractiveness of girls for an average budget.

Started going downwards in 2018 due to lax face control and this might get even worse with the World Cup. In terms of layout one of the best Moscow nightclubs because it’s very big and bottle service gives you a good edge here. Still attracts lots of cute girls with loose morals but plenty of provincial girls (and guys) as well. Swooping is fairly easy here.

I haven’t been at this place in over a year, ever since it started becoming ground zero for drunken teenagers. Similar clientele to Icon but less chic, younger and drunker. Decent mainstream music that attracts plenty of tourists. Girls are easy here as well.

Sort of a Coyote Ugly (the real one in Moscow sucks) with party music and lots of drunken people licking each others’ faces. Very entertaining with the right amount of alcohol and very easy to pull in there. Don’t think about staying sober in here, you’ll hate it.

Artel Bessonitsa/Shakti Terrace

Electronic music club that is sort of a high-end place with an underground clientele and located between the teenager clubs Icon and Gipsy. Very good music but a bit all over the place with their vibe and their branding. You can swoop almost any type of girl here from high-heeled beauty to coked-up hipsters, provided they’re not too sober.

Afterparty: if by 5AM  you haven’t pulled, it’s time to move here.

Best afterparty spot in terms of trying to get girls. Pretty much no one is sober in there and savage gorilla game goes a long way. Lots of very hot and slutty-looking girls but it can be hard to tell apart who is looking for dick and who is just on drugs but not interested. If by 9-10am you haven’t pulled, it is probably better to surrender.

The hipster alternative for afterparties, where even more drugs are in play. Plenty of attractive girls there but you have to know how to work this type of club. A nicer atmosphere and better music but if you’re desperate to pull, you’ll probably go to Miks.

Weekday jokers: if you’re on the hunt for some sexy Russian girls during the week, here are two tips to make your life easier.

Chesterfield

Ladies night on Wednesdays means this place gets pretty packed with smashed teenagers and 6s and 7s. Don’t pull out the three-piece suit in here because it’s a “simpler” crowd. Definitely your best shot on Wednesdays.

If you haven’t pulled at Chesterfield, you can throw a Hail Mary and hit up Garage’s Black Music Wednesdays. Fills up really late but there are some cute Black Music groupies in here. Very small club. Thursday through Saturday they do afterparties and you have an excellent shot and swooping girls that are probably high.

Shishas Sferum

This is pretty much your only shot on Mondays and Tuesdays because they offer free or almost free drinks for women. A fairly low-class club where you should watch your drinks. As always the case in Moscow, there will be cute girls here on any day of the week but it’s nowhere near as good as on the weekend.

In a nutshell, that is all you need to know about where to meet Moscow girls in nightlife. There are tons of options, and it all depends on what best fits your style, based on the type of girls that you’re looking for.

Related Topics

• moscow girls
• moscow nightlife

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