UK Supreme Court Rules on VAT Deductibility for Professional Fees in Share Sale Transactions

• The UK Supreme Court ruled that VAT on professional fees related to a share sale is only deductible if “directly and immediately linked” to a taxable sale, not an exempt one.
• VAT may be deductible if costs relate to the business as a whole, but in this case, the fees were specifically for the share sale.
• The court rejected arguments to focus on the purpose of raising funds and clarified that VAT grouping does not provide additional reliefs.
• Each case of VAT recovery on deal fees must be assessed on its specific facts and circumstances.
• The decision underscores a strict application of the direct and immediate link test for VAT deductibility.

Source: kpmg.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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