VAT recovery in relation to corporate acquisitions has been a challenging issue across the EU for many years. The recent case of Magyar Villamos Müvek (MVM) confirmed that input tax may still not be reclaimable by a group holding company, even when it appears to carry on economic activity by being actively involved in the management of its subsidiaries. HMRC, which intervened in the MVM case, have now released an update to their draft guidance on the UK VAT position of holding companies. These developments illustrate the need for taxpayers to take practical steps to ensure they mitigate potential VAT costs on acquisitions.
In a recent article for Tax Journal*, Peter Dylewski and Philippe Gamito from KPMG in the UK’s indirect tax team take a look at the implications of this case in more detail, as well as considering what businesses should be doing in response.
* First published in Tax Journal on 17 February 2017. Reproduced with permission.
For further information please contact :