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Shareholders' Agreement Service agreement

A newly incorporated company; 2 Directors, one of whom is also a shareholder and a further 2 shareholders instruct Solicitors to draw up a shareholders service agreement. The Solicitors bill the company, which in turn, charge the net amount to allowable legal fees, in the draft accounts and has claimed the Vat input tax from the account. 

My view is; the account should have been issued to the shareholders, party to the agreement and the costs apportioned to each shareholder in the ratio of their holding. The vat input tax should not have been claimed by the company?

What is the opinion of other contributors please.

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02nd Jul 2010 13:39

Agree with you

As you presumably have a close company, this leaves some interesting problems if you want to go into all the tax aspects (however I won't do that just here, but in case anyone else wants to take this up, I am thinking the whole interaction of the 2010 Corporation tax act provisions with jolly ITEPA 2003). I would get them to repay it very quickly, and adjust the VAT too.

Virtual tax support for accountants, visit: www.rossmartin.co.uk

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