Updated HMRC guidance for holding companies and VAT recovery

HMRC have released the updated guidance for holding companies and VAT recovery. This is important because the role of a holding company can differ and as a result so will its VAT status and eligibility to reclaim VAT on costs. 

Calculating VAT

This updated guidance from HMRC defines what a holding company is and helps determine whether it is engaged in economic activity or not.  The guidance also covers whether VAT incurred by a holding company is deductible based on that economic activity.  For VAT to be deductible on a supply to a holding company, that holding company must contract, use, be invoiced and pay for the supply.  Additionally, there must be a direct and immediate link to taxable supplies.

This is a good opportunity to review the activity of your holding companies and ensure you are maximising your VAT position.

The link to the new guidance is here



For further information please contact our Director of VAT, Alison Birch

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