.png)
.png)
HMRC have updated their guidance on when VAT recovery may be possible for holding companies.
The change follows the decision in British Airport Authority (BAA) v CRC [2013] STC 752, in which the Court of Appeal confirmed that VAT is recoverable only where there is a direct and immediate link to taxable supplies.
HMRC have updated their guidance on when VAT recovery may be possible for holding companies.
The change follows the decision in British Airport Authority (BAA) v CRC [2013] STC 752, in which the Court of Appeal confirmed that VAT is recoverable only where there is a direct and immediate link to taxable supplies.
The facts in the case of BAA – which failed to receive permission to appeal to the Supreme Court – related to particular circumstances. The decision does not address other issues relating to holding companies, said the Revenue, which takes taxable supplies to include those not charged to UK VAT but which carry a right to input tax recovery.
The department’s revised guidance is in the VAT Input Tax Manual and covers the following:
- when a shareholding is used as part of an economic activity;
- when VAT may be recoverable by a holding company;
- the effect of a holding company joining a VAT group; and
- how to treat mixed economic and non-economic activities.
The German case Beteiligungsgesellschaft Larentia + Minerva mbH & Co KG v Finanzamt Nordenham (C-108/14 and C-109/14) covers similar issues, and has been referred to the Court of Justice of the European Union (CJEU).
HMRC have pledged to review their policy after the CJEU hands down its ruling in around 12 to 18 months.
