HMRC has now published updated guidance on VAT and holding companies in the form of amendments to its VAT Input Tax manual. The updated guidance clarifies that in order for a company to recover input VAT on its costs it must:
be the recipient of the supply
undertake a business activity for VAT purposes, and
be VAT registered/registerable at the time the cost is incurred
The costs must also have a direct and immediate link with the holding company's taxable supplies, although costs without such a link may still be deductible where they have a direct and immediate link with the business activity of the holding company or relevant VAT group as a whole.
HMRC has now published updated guidance on VAT and holding companies in the form of amendments to its VAT Input Tax manual. The updated guidance clarifies that in order for a company to recover input VAT on its costs it must:
be the recipient of the supply
undertake a business activity for VAT purposes, and
be VAT registered/registerable at the time the cost is incurred
The costs must also have a direct and immediate link with the holding company's taxable supplies, although costs without such a link may still be deductible where they have a direct and immediate link with the business activity of the holding company or relevant VAT group as a whole.
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