The basic concept of the UK’s VAT regime, as far as it applies to corporate transactions, is deceptively simple: recovery of ‘input’ VAT is allowed where it is incurred on supplies used to make further taxable supplies. When a business is sold, no VAT is payable and financial services are exempt from VAT. Behind those simple (if not simplistic) statements lurks a considerable debate. Recovery of VAT on professional fees incurred on a takeover is the subject of the advocate general’s opinion in Ryanair. The exact timing of steps was critical to TOGC status in Clark Hill and outsourcing in the financial services sector is given further consideration by the First-tier Tribunal, confining the availability of financial services exemption to narrow facts.
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