Transact owner faces £4.3m VAT charge
29 Jan 2020
IntegraFin Holdings plc (IHP), parent company of UK investment platform Transact, has been hit with an unexpected £4.3m VAT bill after HMRC challenged its inclusion of its Australian operations within its UK VAT group
29 Jan 2020
In a stock exchange announcement, IHP revealed it had received notice from HMRC about VAT paid by one of its companies, Australian-based Integrated Application Development Pty Ltd (IAD). HMRC said IAD's membership of a UK VAT group would be terminated with effect from 16 July 2016.
IAD provides and maintains Transact’s software systems. The consequence of its exclusion from the UK VAT group is that the services provided from Australia would be subject to reverse charge VAT.
HMRC's notice states that the VAT due since July 2016 will be approximately £4.3m and that going forward there would be an additional VAT charge of approximately £1.4m annually. IHP says it does not yet know whether HMRC will charge interest and/or a penalty.
IHP indicated it plans to challenge HMRC’s decision, saying it included IAD in the UK VAT group having taken specialist advice and followed that advice to ensure that the inclusion of IAD's branch in the UK VAT Group was in accordance with the relevant laws.
The company stated: ‘The content of the communication is not what we were expecting. The company is considering its response in consultation with its advisers.’
According to its 2019 annual report, BDO has been the group auditor for nine years and company auditor since its incorporation. IHP said it was intending to put the external audit out to tender during the financial year 2020, in order to comply with the rules on mandatory auditor rotation.
The annual report also stated that the Financial Reporting Council had performed an audit quality inspection on BDO’s audit of IHP. It said: ‘The findings from the FRC have been addressed by BDO and agreed by the group.’
By Pat Sweet
Related article: Eligibility criteria for VAT group registration