Where a lender incurs costs in deciding whether to make a loan, e.g. accountancy fees, the borrower generally pays. If the borrower is fully taxable, it usually wishes to recover the VAT on these fees, as the costs are incurred to expand that taxable business (and costs related to borrowing are overheads for partial exemption).

HMRC agreed with the Society of Insolvency Practitioners on the recovery of VAT relating to business viability studies carried out by investigating accountants. For further details, see Business Brief 6/1995 (28 March 1995), which is reproduced below.

VAT ON VIABILITY STUDIES

Want to read more?

This content requires a Croner-i Tax and Accounting subscription.

Existing subscriber? Log in

No subscription?

Contact us to discuss your requirements.