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This guidance note looks at some practical points that a holding company should consider when setting up a management services arrangement.

When shares are acquired in a subsidiary (or subsidiaries), it is common for a holding company to be set up as an acquisition vehicle. Often this acquisition vehicle will decide to provide taxable management services to the subsidiary (or subsidiaries) in order to try to secure VAT recovery on the acquisition costs (such as professional fees).

For an overview of VAT and holding companies generally, see the Holding companies ― overview guidance note. See also the following guidance notes for discussion of some of the key principles associated with holding companies and VAT recovery:

1. •

   Holding companies ― VAT status of activities

2. •

   Holding companies ― is there a direct and immediate link?

3. •

   Holding companies ― who is the recipient of the supply?

4. •

   Holding companies ― VAT grouping