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VAT on management charges to shift profits

21 November 2018 / Neil Warren
Issue: 4673 / Categories: Comment & Analysis

Howzat? Not out!

KEY POINTS

  • Use of management charges to move profits between two companies.
  • HMRC guidance at VATSC55400 gives examples of when it considers management charges have not been made.
  • In Stirling Investments it was agreed that a payment was a dividend not a management charge.
  • If no taxable sales are involved the charge can be ignored for VAT.

Cricket is on my mind as I write this because England’s men have won the second Test in Pallekele to clinch the three-match series against Sri Lanka. England’s women have also reversed their fortunes in the Caribbean after two matches were abandoned due to the weather and a couple of defeats to reach the semi finals of the World Twenty20 tournament. Being a batter at cricket is probably the hardest job in the world of sport. One...

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