Airports operator BAA has won a key VAT dispute with the taxman relating to
how takeover costs are taxed.
BAA’s win comes after package holiday company
landmark victory last year pinpointed by Accountancy Age as a key ruling.
BAA successfully argued it could recover VAT paid on professional services
costs, such as legal, due diligence, bank fees and advisory work linked to
Spanish suitor Ferrovial’s takeover bid in 2006.
Court papers say the taxman was looking to retain approximately £6.7m in VAT:
“HMRC disputed the input tax recovery and raised an assessment to VAT in the
amount of approximately £6.7m. The representative member of the BAA VAT group
appealed against that assessment,” Judge Peter Kempster said in the decision
Richard Vitou, VAT partner at Deloitte said: “This case has significant
implications for businesses in both the corporate and private equity M&A
arena whose VAT recovery on transaction costs is currently subject to challenge
“Businesses affected by this decision should now consider making claims for
repayment of VAT. The total figure at stake for other taxpayers could easily
amount to £100m.”
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