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An intermediary or not for VAT purposes?

My client acted as a subcontractor to an M&A firm. Is his share of the success fee exempt from VAT?

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My client (A) provided services to an M&A firm (B) in connection with the sale of the share capital owned by B's client (C) to another party (D). B earned a success fee on the sale of C's shares to D. B correctly invoiced its success fees on the transaction as exempt from VAT. My client A wants to know whether he is also entitled to invoice B for his share of that success fee as an exempt supply for VAT purposes?

The services provided by A to B included identifying potential acquirers of C's shares with whom A had knowledge and connections and contacting these with a view to introducing them to C, via B. As part of this service A provided these potential acquirers with a company profile of C's company and held discussions regarding the fit of C's company with their businesses in order to generate and test their interest in acquiring C's company. The evential acquirer of B's shares was not one of A's introductions. 

FYI: A also provided advisory services to B in the drafting of the Information Memorandum of C's company which were invoiced separately to B with standard rated VAT.

 

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chips_at_mattersey
By Les Howard
24th Oct 2019 19:17

A fine line on this one. I lean towards the taxable, since, from your description A brought B and C together, not C and D.
But given the complexity and, I suspect, the value of such a supply, fuller professional advice is essential.

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Replying to leshoward:
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By JohnToppin
29th Oct 2019 10:37

Hi Les, thank you. A did not bring C and D together. B did.

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By Clinton Lee
25th Oct 2019 10:46

A has provided standard marketing / lead generation services to B. I can't see why there's a remote possibility this is exempt from VAT.

When you say "the eventual acquirer of B's shares" I take it the alphabet soup got a little bit mixed up somewhere. My understanding is that it wasn't B's shares that were sold, it was C's.

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Replying to Clinton:
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By JohnToppin
29th Oct 2019 10:39

Hi Clinton thank you, you are right - the soup was mixed up at the end - C's shares were sold of course!

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