European Court VAT judgement hits share issues

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Tax experts at accountants PKF have warned that a decision by the European Court could see companies lose millions of pounds in VAT when they raise money through share issues.

Precedence has been set by the European Court telling German tax authorities they were right to deny investment company Securenta its VAT reclaim of around 2.5 million. Part of this 1994 claim was incurred when raising capital by issuing shares amongst other things.

PKF VAT Partner Gerry Myton said, "The Securenta decision may prove very expensive for some quoted companies. It is a complex area but some quoted companies which have issued shares or do so in the future may have very substantial irrecoverable VAT on their costs running into millions of pounds. We expect companies most likely to suffer significant VAT cost...

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