Value Added Tax

Holding companies ― who is the recipient of the supply?

Produced by Tolley
  • 21 Dec 2021 16:46

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Holding companies ― who is the recipient of the supply?
  • Is the holding company the recipient of a supply?
  • Viability studies, due diligence reports, professional fees, etc
  • Costs of a target company
  • Practical points ― recipient of the supply

Holding companies ― who is the recipient of the supply?

This guidance note examines how to identify the recipient of a supply for VAT purposes in the context of holding companies.

It is common for VAT to be incurred on a variety of costs associated with acquiring, holding or disposing of companies. However, a holding company can only recover VAT where it is the ‘recipient’ of the supply in question (amongst other factors).

Often the question of who receives a supply is straightforward. However, sometimes complexities can arise (particularly for holding companies).

For an overview of VAT and holding companies generally, see the Holding companies ― overview guidance note.

Is the holding company the recipient of a supply?

A holding company will only be able to recover VAT on costs where it is the recipient of the supply in question.

HMRC suggests in its guidance that a holding company is the recipient of a supply where all of the following conditions are satisfied:

  1. it has entered into the contract for the supply (or had the contract novated to it)

  2. it has made use of the supply

  3. it has received the invoice for the

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