Following the BAA case, HMRC has shifted its position on the recovery of deal fees. In this practice guide, Alan Sinyor (Berwin Leighton Paisner) outlines the key principles of the approach which should now be considered.
The VAT incurred on M&A deal fees is often substantial representing 20% of all legal accountancy and some banking fees. VAT will become an absolute cost if the business cannot recover it from HMRC.
As the recent case involving BAA shows VAT recovery is a particularly tricky issue where a UK NewCo is set up to act as the purchaser in an M&A deal. Following the recent Court of Appeal judgment accepting HMRC’s position on the issue (see BAA Ltd v HMRC [2013] EWCA Civ 112) BAA failed to recover several million pounds of VAT...
