UK securitisations using an EU-based securitisation vehicle may get a VAT benefit post-Brexit transition. Currently, VAT on securitisation costs is likely irrecoverable for UK originators. VAT-exempt servicing by the originator would block input VAT recovery. Whilst VAT recovery is already specifically allowed for input tax attributable to VAT-exempt servicing supplied to counterparties outside the EU, UK securitisations generally use either UK or EU-based issuers. However, the UK Chancellor of the Exchequer, Rishi Sunak, recently confirmed this rule will be extended to apply where counterparties are anywhere outside the UK. So UK originators using Luxembourg or Irish securitisation issuers may start to qualify for input VAT recovery.

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