Joint ownership

[Kitty Kat]

Say a company owns a piece of machinery, then say they sell half the machine to someone not for them to use, but for them to later share in profits realised.

Where does the VAT come into it? Is the payment VAT'able? Or the final monies to the other party?

[pawncob]

Pupose of sale doesn't matter, it's a VATable disposal.

[Kitty Kat]

Pupose of sale doesn't matter, it's a VATable disposal.

I'm glad you said that

As a follow on, if the sale was to an overseas EU customer, but the goods never left the UK, would that mean it was a SR transaction (can't zero rate as the goods never cross a border) and the EU customer couldn't reclaim the VAT as they didn't receive the goods (therefore failing the test for recovery)?

[Generix]

Consider if its a services or goods.

If goods then UK VAT if goods don't move.

If services then use the appropriate place of supply rules, i.e. basic unless an exception applies.

[les35]

Where there is not a supply of title and possession, the supply becomes a supply of services. If this is cross-border, then the special 'Place of Supply' rules apply. The place of supply may, therefore, be the Member State where the recipient is established.
VAT Act s5(1), and Sch 4, paras 1 & 2 apply to establish whether there is a supply of services.
(welcome to the fiscal theme park that is VAT!)

[Generix]

Where there is not a supply of title and possession, the supply becomes a supply of services. If this is cross-border, then the special 'Place of Supply' rules apply. The place of supply may, therefore, be the Member State where the recipient is established.
VAT Act s5(1), and Sch 4, paras 1 & 2 apply to establish whether there is a supply of services.
(welcome to the fiscal theme park that is VAT!)

Les Did the hard work for you

[Kitty Kat]

Where there is not a supply of title and possession, the supply becomes a supply of services. If this is cross-border, then the special 'Place of Supply' rules apply. The place of supply may, therefore, be the Member State where the recipient is established.
VAT Act s5(1), and Sch 4, paras 1 & 2 apply to establish whether there is a supply of services.
(welcome to the fiscal theme park that is VAT!)

My first thought on finding the goods weren't going anywhere was perhaps it was a service, in which case reverse charges would come into play (I believe). That might actually be good, as without the goods being received by the EU company they wouldn't be able to recover the VAT (right?), but with the reverse charge they could (assuming fully taxable) recover all the VAT making the transaction VAT neutral all round.

[Generix]

Where there is not a supply of title and possession, the supply becomes a supply of services. If this is cross-border, then the special 'Place of Supply' rules apply. The place of supply may, therefore, be the Member State where the recipient is established.
VAT Act s5(1), and Sch 4, paras 1 & 2 apply to establish whether there is a supply of services.
(welcome to the fiscal theme park that is VAT!)

My first thought on finding the goods weren't going anywhere was perhaps it was a service, in which case reverse charges would come into play (I believe). That might actually be good, as without the goods being received by the EU company they wouldn't be able to recover the VAT (right?), but with the reverse charge they could (assuming fully taxable) recover all the VAT making the transaction VAT neutral all round.

I wouldn't say that not receiving the goods in your local territory specifically precludes input VAT deduction.

In any case it is as you suggest, VAT neutral - as I would go with basic rule applying.

[Kitty Kat]

I wouldn't say that not receiving the goods in your local territory specifically precludes input VAT deduction.

I was always led to believe that HMRC don't let you recover VAT if you never got the goods, perhaps I am reading too much into 'get the goods' and thinking they have to physically have it in their hands.

The client is adamant the overseas company couldn't recover the VAT, and I assumed that was the reason. One to put to the client I suspect.

Thanks

[Generix]

I wouldn't say that not receiving the goods in your local territory specifically precludes input VAT deduction.

I was always led to believe that HMRC don't let you recover VAT if you never got the goods, perhaps I am reading too much into 'get the goods' and thinking they have to physically have it in their hands.

The client is adamant the overseas company couldn't recover the VAT, and I assumed that was the reason. One to put to the client I suspect.

Thanks

Maybe they were thinking it was because they were not UK VAT registered?