Transaction support

It's important that the VAT implications associated with transactions are not overlooked.

We regularly advise in relation to:

Acquisitions and disposals, group restructures and reorganisations and refinancing exercises

The transaction support we can offer includes:

Reviewing the SPAs and contractual agreements to confirm the VAT position.

Confirming whether the transaction qualifies as a Transfer of Going Concern (“TOGC”) and meets the necessary requirements.

VAT due diligence exercises to ensure the VAT risks have been covered off and there are appropriate warranties and indemnities in the SPA.

Advice in relation to land transfers, including consideration of the option to tax and VAT capital goods scheme.

Structuring engagement letters and invoicing arrangements with professional advisers to maximise the VAT recovery position.

Implementing arrangements to ensure the BidCo undertakes an economic activity, to reclaim the VAT incurred on acquisition costs.

Liaising with HMRC to agree on the VAT position to manage any potential risk of challenge in the future.

Structuring engagement letters and invoicing arrangements with professional advisers to maximise the VAT recovery position.

How we've helped clients

Commercial provider of adult social care

The situation

Our corporate tax team had been working on a group reogranisation for refinancing purposes. They identified an efficient direct tax compliance structure.

The client was keen to complete to see the wider investment for it to meet its growth ambition.

The challenges

We reviewed the group structure and identified the approach that would lead to a VAT clawback liability in excess of £500,000 due to the VAT change in use provisions.

Our solution

We worked closely with the client and the corporate tax team to restructure the arrangements so that we still triggered the VAT clawback adjustment, the VAT incurred would be recoverable by the relevant company.

Our work involved registering the company for the VAT and making a zero rated supply to the new operators. We managed and agreed the position with HMRC as part of the implementation. There were no irrecoverable VAT costs as a result of our work and the transaction completed 1 month later than planned.

How we've helped clients

Restructuring a large corporate group

The situation

Our general practice team had undertook a comprehensive exercise to restructure the corporate group in preparation for a sale in a tax efficient way.

We reviewed the proposals immediately prior to implementation to ensure the VAT position was managed.

The challenges

We identified that the restructure involved a number of property transfers where the properties has been opted to tax.

As a result of the restructure, the options to tax made by the new hold company would be disapplied under the HMRC anti-avoidance provisions. This would have resulted in additional VAT costs associated with the provisions of in excess of £330K.

Our solution

We ensure that the client was aware of the VAT payable where the restructure was to proceed.

We identified an approach that would lead to a reduction in the VAT payable of £140,000 where the restructure could be delayed for 10 months.

Our approach allowed the client to proceed with their eyes open and to test the water in terms of identifying a potential buyer within the 10 month period whereby we could reduce the liability. We ensured no surprises.