In the course of an M&A activity, you may acquire services or things which are related to the operation of the newly merged business and not to the M&A transaction itself. Such services may include those which relate to integrating the entities engaged in a merger or acquisition such that they operate effectively as a single business after the transaction is completed. Examples of such services include human resource consultancy services designed to deal with cultural issues and staff retention in the new business, or marketing services dealing with new branding.
Acquisitions which fall into this category could be described as integration costs rather than transaction related costs. Where such acquisitions are able to be identified clearly, it may be appropriate to treat the acquisitions as enterprise costs which relate to all the supplies made by the merged entity, rather than relating to any particular supplies, and apportion input tax credits accordingly. However, careful consideration will need to be given to such acquisitions in light of the facts and circumstances in each case to properly determine whether or not they are integration costs or are more properly to be considered as acquisitions that relate to an M&A activity.