Reply To: VAT Recovery on Share Transactions

Forum Categories VAT ON PROPERTY TRANSACTIONS VAT Recovery on Share Transactions Reply To: VAT Recovery on Share Transactions


The VAT treatment of share transactions has historically been a complex issue particularly for taxpayers in terms of whether VAT can be recovered on related costs. HMRC finally published its latest guidance earlierin 2017 in VAT Manual VIT40600, which sets out what it now considers to be the criteria for input tax deduction by HoldCos (holding companies) with the two main conditions for VAT recovery being shown below:

1. It must be the recipient of the supply, i.e. it has contracted for the supply (including by novation), it has made use of the supply, and has been invoiced and paid for the supply; and

2. The costs on which VAT is incurred must have a direct and immediate link to taxable supplies conducted by the HoldCo (or the VAT group that the HoldCo is a member of) and this is supported by management fees, supplying interest bearing loans to non-EU,