Corporate finance and VAT recovery

A company may decide to raise funds to expand its existing business or acquire a subsidiary. Common methods of raising funds include loan finance issuing shares and selling assets. A sale of assets can involve the sale of shares in a subsidiary or it may involve the sale of land and buildings.

A significant issue can be whether VAT is recoverable on the costs incurred. For example the VAT on the services supplied by accountants brokers estate agents and solicitors.

One of the conditions for VAT to be recovered as input tax is that the VAT must have been correctly charged on the supply. Certain intermediary services supplied for the purpose of raising funds can meet the conditions for VAT exemption and if the conditions are met VAT cannot be correctly charged on such supplies.

If VAT is wrongly charged on...