VAT Ruling in AIM Listing Case Could Extend To Other Exchanges

by Jason Gorringe, Tax-News.com, London

02 September 2003

A landmark decision in a VAT tribunal test case has ruled that a firm can claim back tax on the cost of professional advice taken in the process of listing on London's Alternative Investment Market (AIM).

According to accountancy firm Grant Thornton, some 100 companies it has advised during AIM flotations in the last three years could benefit to the tune of £20,000 each as a result of the decision, which Customs and Excise cannot now appeal against as the deadline expired last week.

The case centres on property firm Halladale Group which spent £285,700 in the course of its AIM flotation in April 2001 including expenses such as accountancy, public relations, legal advice and printing, and paid an additional £50,000 in tax. At a VAT & Duties tribunal in June it was ruled that the firm could claim back the tax as a general overhead because the firm's reason for listing was twofold, to raise cash and to establish itself as a listed company.

The repercussions for Customs could go beyond firms listed on AIM says Frank Hartley, VAT partner at Grant Thornton, who believes that more the ruling could include companies listed on other exchanges, according to a report in the Daily Telegraph.

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