VAT Recovery on Professional Fees for a Company Sale

The Challenge

A client incurred significant professional fees in connection with the sale of shares in their personal trading company, including costs from solicitors, corporate finance advisers, and tax advisers. The key issue was determining which elements of those fees were eligible for VAT recovery.

The position was complex due to the need to distinguish between costs incurred for the benefit of the company versus those incurred personally by the shareholders. HMRC subsequently opened an enquiry into the VAT claim.

The Solution

We reviewed the nature of each cost, focusing on who incurred the expense and whether it was incurred for the purposes of the business, rather than for the shareholders personally. Based on this analysis, we identified which fees were legitimately recoverable for VAT purposes and supported the client’s claim with clear technical arguments.

We also led the response to HMRC’s enquiry, addressing queries and providing detailed explanations to defend the VAT recovery position.

The Value

HMRC accepted our position, allowing the client to retain the VAT recovered on eligible professional fees. This reduced the net cost of the transaction and provided the client with confidence that their VAT treatment was robust, compliant, and defensible under HMRC scrutiny.