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Where Taxpayers and Advisers Meet

Joint ventures and VAT registration

Curious Beast
Posts:11
Joined:Tue Jul 30, 2013 3:35 pm
Joint ventures and VAT registration

Postby Curious Beast » Tue Aug 18, 2020 10:31 am

Hi all

A client company has approached me to say they are looking to carry out a joint venture project with another company. From a VAT point of view my reading suggests there is no such thing as a joint venture, so they are either accounting for their own share of income/expenses or forming a partnership.

The client wishes for the latter, so is it just a case of forming a partnership with two corporate members (I've never done anything for a partnership with any non-natural members, never mind with no non-natural members, I didn't even think it was an option! I studied LLP's with non-natural members way back, but never had one of those in practice either.) and registering it for VAT?

The accounting side is being sorted by a colleague, so I'm only focused on the VAT angle at the moment.

Thanks all.

les35
Posts:603
Joined:Wed Aug 06, 2008 3:09 pm

Re: Joint ventures and VAT registration

Postby les35 » Tue Aug 18, 2020 11:19 am

A Partnership can consist of non-natural persons. I would recommend a simple Heads of Terms agreement between the parties, to demonstrate the arrangement. You may need to provide that to HMRC for when you register the Partnership.

Curious Beast
Posts:11
Joined:Tue Jul 30, 2013 3:35 pm

Re: Joint ventures and VAT registration

Postby Curious Beast » Tue Aug 18, 2020 11:43 am

A Partnership can consist of non-natural persons. I would recommend a simple Heads of Terms agreement between the parties, to demonstrate the arrangement. You may need to provide that to HMRC for when you register the Partnership.
Thanks Les, clearly I've a gap in my experience :)

Presumably the process for setting up the partnership is identical (form wise) as for if all partners were natural? I'll get a Heads of Terms agreement sorted in anticipation of HMRC asking for one.

les35
Posts:603
Joined:Wed Aug 06, 2008 3:09 pm

Re: Joint ventures and VAT registration

Postby les35 » Tue Aug 18, 2020 3:30 pm

Yes, list of Partners on Form VAT2. I suspect HMRC will want confirmation.
(I've not seen many of these!)

Curious Beast
Posts:11
Joined:Tue Jul 30, 2013 3:35 pm

Re: Joint ventures and VAT registration

Postby Curious Beast » Fri Aug 21, 2020 7:59 am

Yes, list of Partners on Form VAT2. I suspect HMRC will want confirmation.
(I've not seen many of these!)
Merci beaucoup!

I'll let you know of any Trials and Tribulations I experience :)

les35
Posts:603
Joined:Wed Aug 06, 2008 3:09 pm

Re: Joint ventures and VAT registration

Postby les35 » Fri Aug 21, 2020 9:29 am

Feel free to DM me if HMRC ask difficult questions!

Curious Beast
Posts:11
Joined:Tue Jul 30, 2013 3:35 pm

Re: Joint ventures and VAT registration

Postby Curious Beast » Fri Aug 21, 2020 3:10 pm

Feel free to DM me if HMRC ask difficult questions!
Les I have a difficult question! :)

On VAT1 it asks if you, any partner or any director have been involved in another business in the last 2 years. Easy enough if you are a sole trader, company or partnership with natural partners registering, but given the partners are companies, does that mean I need to note any connected businesses OR does it mean I need to consider each director of each company and whether they have been involved in any other businesses?

I'm leaning towards the former (in which case no connections as each company has no subsidiaries etc...) on the basis it is the company that is the partner, not the directors, and they are two distinct legal entities, but my company knowledge is imperfect as I've said so maybe I'm being naive... If it is the latter then boy do I have a fun time ahead as each director is also a director of a couple of other companies, so the list will be well into double figures.

Curious Beast
Posts:11
Joined:Tue Jul 30, 2013 3:35 pm

Re: Joint ventures and VAT registration

Postby Curious Beast » Fri Aug 21, 2020 3:55 pm

Oh wow, and when I do a 64-8... "I John Smith of John Smith Ltd as partner of John Smith and Jones partnership"...

Because John Smith isn't a partner of John Smith and Jones... and the company can't sign a 64-8 (a secretary signs on it's behalf...).

This is too much muddle for a Friday afternoon...

les35
Posts:603
Joined:Wed Aug 06, 2008 3:09 pm

Re: Joint ventures and VAT registration

Postby les35 » Tue Aug 25, 2020 10:23 am

I would consider all the Directors of all the Partnership companies. Its better to provide too much information now than fail to do so, and have the application delayed by HMRC questions.

Curious Beast
Posts:11
Joined:Tue Jul 30, 2013 3:35 pm

Re: Joint ventures and VAT registration

Postby Curious Beast » Wed Aug 26, 2020 12:25 pm

I would consider all the Directors of all the Partnership companies. Its better to provide too much information now than fail to do so, and have the application delayed by HMRC questions.
Thanks!


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