Dealing with the complexity of commodity futures

Throgmorton were approached by a business establishing both a commodity futures fund and investment management business and a commodity futures trading company.

Dealing with commodity derivatives gives rise to many complications from a VAT perspective and a thorough understanding of the Group’s intended activity was necessary before it was clear on the appropriate approach to VAT registration.

A detailed review of the trading activity was carried out by our VAT specialists. Only after we understood with whom and in which markets the futures trading company intended to operate could we be confident that including it in the new VAT group would not cause disproportionate VAT complexity and potential cost.

Having agreed our approach with the client, we prepared the necessary VAT group registrations and facilitated their submission to HM Revenue & Customs. 
 
Understanding the client’s business flow also enabled our accounts team to build processes to capture the trade information necessary to support the preparation of the VAT returns, and to identify changes to our client’s business that could cause an alter to its VAT position. 
 
 
Trevor Brown, Director, Throgmorton: “Inevitably, the first VAT return, which included a significant refund application, was reviewed in detail by HMRC. The initial investment in our collective understanding and in establishing appropriate accounting systems paid dividends in a smooth interaction with HMRC and the speedy receipt of a significant VAT refund.” 
 
For VAT advice contact Kerry Kelly.
 
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