Commentary

V3.464A Attribution of specific transactions

Part V3 Supplies, acquisitions and imports

V3.464A Attribution of specific transactions

V3.464A Attribution of specific transactions

Introduction

Legislation and case law requires that input tax incurred in relation to particular classes of transaction is attributable to those transactions in specific ways, which are detailed below.

Self supplies

Where a person makes a supply to himself under, or by virtue of, any provision of VATA 1994, the input tax on that supply is not allowable as attributable to that self-supply1. It must be attributed to the use to which that supply is actually put.

Securities and secondary securities

The pre-Kretztechnik position

Under current UK legislation, a body corporate may make either an exempt or a “taxable”2 supply if it makes an issue of shares or sells shares in one of its subsidiaries. Legal and accounting fees, underwriting commissions, Stock Exchange Listing fees, etc relating to the issue or disposal are properly attributable to the supply made3. It follows that where the issue/sale is exempt, input tax on such costs will not be recoverable; where it is “taxable”, related input tax will be recoverable4.

However, the kind of fees referred to above often relate to more than matters relating to share transactions; for example, they may relate to advice on how to raise capital, or to help in obtaining a bank loan5. Input tax on these services, viewed in isolation would usually be regarded as residual input tax, and normally recoverable at least in part. HMRC formerly took the view6 that, where a supply of services related both to an exempt disposal of shares and to more

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