Common financial interest / Same economic objective

Hi, I’m reading from Statement of Practice 4 (1983) Published 1 April 1983 https://www.gov.uk/government/publications/statement-of-practice-4-1983/statement-of-practice-4-1983 Under section 6 there are 2 lines which I’d like you to clarify. I spoke to your colleague on the VAT helpline, who referred it to a VAT technical staff member, but neither were able to explain their meaning. I also received an arranged callback from another VAT technical staff member, but got no further forward. What is the meaning of the following: Financial links • common financial interest in the proceeds of the business Economic links • seeking to realise the same economic objective

Hi. The Statement of Practice refers to the separation of businesses where these are artificial in nature. So the statement is referring to financial links between these 2 separeate businesses. In order for these businesses to be separate for VAT purposes then you would need to define any financial links bewteen them which would compromise their separeate individual statuses. Thank you .

 

Understood, but that's too general to help Can you explain the meaning of, and give an example of the following: "common financial interest in the proceeds of the business" and "seeking to realise the same economic objective"

Hi,

Unfortunately there are no examples in the guidance available. As it says in the guidance 'each case will depend on its specific circumstances'

You need to think about how separate these two businesses are in tems of the financial proceeds from each of the business and whether, for example, one business would benefit financially from the success of the other business.

Thank you.