A VAT Tribunal ruled that Southampton Leisure Holdings plc, the owners of Southampton FC, could claim back a ‘significant amount of VAT’ on the costs it incurred when it bought the club.
The ruling was made despite the fact that Customs normally prevents many businesses, which are fully taxable for VAT purposes, from recovering the VAT charged on the costs of an acquisition or reorganisation.
However, Big Four firm Deloitte & Touche, successfully challenged the government agency on behalf of the club at the VAT tribunal, which ruled Customs was wrong to block the VAT recovery.
The services on which the VAT was incurred related to both the issue of SLH’s shares and the acquisition of the club. As a result, the VAT should have been treated as a general business overhead, normally fully recoverable.
Kevin Cresswell, VAT partner at Deloitte & Touche, said: ‘This new decision, although only at tribunal level, will hopefully lead to a review of Customs’ approach on the VAT cost of acquisitions which is currently too restrictive.’
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