The company behind the Transact platform has been hit with a VAT bill of £4m following an HM Revenue & Customs decision.
In a stock market announcement confirming the news yesterday (January 28), Integrafin, the parent company of Transact, said HMRC had decided that Integrated Application Development (IAD), an Australian company, should not be counted as part of the UK VAT group, meaning the services provided to Transact by the Australian company are subject to reverse charge VAT, leaving Integrafin with a £4m tax bill.
The company stated it intended to challenge the decision.
It stated: “The company 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. Therefore, it is likely that the company will challenge HMRC's decision.
"The financial implications of this notice remain uncertain pending the outcome of any challenge.
"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.
"The company does not yet know whether HMRC will charge interest and/or a penalty. The content of the communication is not what we were expecting. The company is considering its response in consultation with its advisers.”
For the six months to the end of March 2019, the company posted a profit of £22.2m.
The company's co-founder and chief executive Ian Taylor recently announced he is leaving his role at the firm, and switching to a new post as executive director.
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