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.
