Activities
The services provided by Corporate Finance provider/advisor will vary depending upon the client/engagement.
The services may include (but will not be limited to):.
1) General financial advice;.
2) Assistance in and arrangement of Capital raising (e.g. by initial public offerings (IPOs) or through other types of share and bond issues);.
3) Mergers and .
Are initial deal fees billed to shareholders who are not VAT registered?
In its planning stage, and prior to any acquisition vehicle being set up, it is common for initial deal fees to be invoiced to the shareholders who are not VAT registered.
Also be mindful that HMRC is actively blocking VAT recovery where it believes there isn’t a supply of services to the company making the acquisition.
Corporate Finance: Partial Exemption (PE) Issues
The purpose of this document is to provide some guidance on a number of matters to be considered when developing an appropriate partial exemption method in relation to “Corporate Finance”.
Corporate finance activities are generally carried out by investment banks as well as by smaller specialist corporate finance boutiques.
Consideration may be giv.
Do corporate finance houses charge VAT?
However, it is worth noting that corporate finance houses’ potential clients may not be aware of this point.
On a recent deal that we worked on, a seller chose a particular corporate finance house above others not least because that entity’s pitch had stated it would not be charging VAT on its fee.
How does finance affect VAT recovery?
The finance to carryout the transaction can also come from a number of different sources, including:
loans and the sales of securities.
These all have different VAT liabilities and can have an impact on the recovery of VAT by the business. • acquisition/merger. Income
The fees arising in this area will vary by type of transaction and also potentially by supplier.
Considering the types of services detailed at Section 1) above, it is possible the calculation and frequency of fees may vary significantly.
For example the fees in each type of service may include (but will not be limited to):.
1) General Financial Advi.
Outputs Value
This is the most common apportionment proxy agreed for corporate finance.
An approach based on outputs values should be reasonably simple to calculate but there are a number of matters to consider.
For example:.
1) Large value fees may have the potential to distort the calculation and the possibility of capping the value of large success fees may ne.
Partial Exemption Apportionment Proxies
Many of the outsourced professional fees incurred by the corporate financier will be directly attributable to a specific taxable or exempt supply and will, therefore, be fully recoverable or fully non-recoverable respectively.
Any proposals for a method of residual input tax recovery in respect of corporate finance activities have to be to be exami.
Which financial services have different VAT liabilities?
Certain financial services, such as:
the provision of intermediary and sub-contracted (‘outsourced’ - see paragraph 1.8) services, can constitute a number of component services that, if supplied separately, may have different VAT liabilities. Foreword
This notice cancels and replaces Notice 701/49 finance (January 2013). Details of any changes to the previous version can be found in paragraph 1.2...
2. Money and related services
References to money in this notice include currency, bank notes and coins, in sterling or any other currency used as legal tender in a financial tr...
3. Securities for money
3.1 Securities for moneyA security for money can be described as a document under seal or under hand for consideration containing a covenant, promi...
4. Credit and related services
4.1 Loans, granting of credit and advancesIf in the course of your business for a consideration you: supply credit advance money in the form of loa...
5. Debts and related services
5.1 Sale of debtsThe unencumbered sale of debt for a consideration is exempt. The value of the supply is the gross amount that the purchaser pays f...
6. Securities and related services
6.1 Shares, securities and other financial instrumentsThe issue of securities such as shares, bonds, loan notes, debentures, are not supplies for V...
7. Management of investments and portfolios, funds, ‘wrapper’ products and related services
7.1 Exemption for the management of ‘special investment funds’Article 135(1)(g) of the Principal VAT Directive exempts ‘the management of special i...
8. Financial derivatives
8.1 IntroductionDerivatives are financial instruments, the price of which is directly dependant upon the value of the underlying commodity, financi...
9. Intermediaries
9.1 What is an exempt supply of intermediary servicesA supplier of an exempt intermediary service is a person who: brings together a person seeking...