VAT recovery on acquisition fees post-BAA

While the sale of company shares is not subject to UK VAT either because it is outside the scope of VAT or because it is exempt from VAT companies which acquire the shares in another company will incur a number of costs which are subject to VAT.

The acquiring company will usually seek to reclaim that VAT on the basis that it is part of its general overheads.

HMRC may limit recovery on a number of grounds; for example if the services are not actually supplied to the acquiring company if the acquiring company does not have an economic activity and...