9 February 2026
In this input tax attribution case, UK FTT confirms product specific photography has no direct link to exempt credit supplies
Littlewoods appealed HMRC’s refusal of input tax recovery on costs incurred producing product specific photographs used on its website and, historically, catalogues. Applying the established direct and immediate link test, the Tribunal examined the nature and use of the photographs objectively and found that each photograph was created to ensure accurate depiction of a single product, to serve as the online substitute for a customer’s physical inspection.
Although credit and insurance options appeared on the same webpages, the Tribunal concluded that this contextual proximity was insufficient to establish a direct link to exempt financial supplies. The photographs neither mentioned nor promoted credit; any influence credit availability had on consumer purchasing was characterised as, at most, an indirect economic consequence, which could not satisfy the attribution test.
The Tribunal also rejected HMRC’s “integrated business” argument, emphasising that attribution must be determined component by component, not by reference to the broader commercial linkage between retail and finance. The Tribunal held that the photography costs were used exclusively in making taxable retail supplies, allowing the appeal in full.
Conclusion / key takeaway / recommendation
- The decision underscores that attribution test depends on how an input is linked to the business's supplies, requiring a close factual analysis, when attributing marketing costs for partial exemption purposes. This decision creates tension with the N. Brown decision which is in HMRC 's manuals, which tension also emphasises the importance of the factual analysis.
