VAT recovery on corporate transactions
Produced in partnership with Pinsent Masons
VAT recovery on corporate transactions

The following Tax guidance note Produced in partnership with Pinsent Masons provides comprehensive and up to date legal information covering:

  • VAT recovery on corporate transactions
  • Business acquisitions
  • Business sales
  • Share acquisitions
  • Share sales
  • Corporate restructurings
  • Share issues

VAT is recoverable by a taxable person if it is attributable to taxable supplies made in the course or furtherance of a business. For an explanation of the rules on VAT recovery generally, see Practice Note: When can a person recover VAT?

VAT paid on professional fees (of accountants, lawyers and other advisers) incurred in corporate transactions may be recoverable depending upon the circumstances of the transaction.

Business acquisitions

The acquisition of a business will often be treated as a transfer of a going concern (TOGC) for VAT purposes. This means that if certain conditions are fulfilled, it will be treated as neither a supply of goods nor a supply of services.

For more information, see Practice Notes: VAT—what is a transfer of a business as a going concern? and VAT—consequences of a transfer of a going concern.

If the purchaser acquires assets by way of a TOGC and the assets are to be used exclusively to make taxable supplies, the VAT incurred on the cost of acquiring those assets (such as professional fees) should be attributed to those taxable supplies and can be recovered in full.

If the assets of the acquired business are to be used exclusively to make exempt supplies, none of the input tax on the cost of acquiring those assets can be recovered.

If the assets are