VAT and triangulation

VAT and triangulation

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We are a UK based company. We have an order from a company in Limerick for goods to be delivered to the UK and invoiced to the company in Limerick. The other two companies are not connected, and all are registered for VAT in their own countries.

Is this an example of triangulation?

How should VAT be accounted for?

Many thanks for any replies

Replies (7)

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By Rob Fox
09th Jun 2011 12:43

VAT and Triangulation
It is indeed triangulation. HMRC guidance is quite helpful on this one, at:
http://www.hmrc.gov.uk/manuals/vatposgmanual/VATPOSG3830.htm

The UK supplier is making a supply at normal UK liability to the customer in Limerick; it can't be zero rated as an intra-EU supply as the goods remain in the UK. The supplier in Limerick is making a UK domestic supply to the final customer, for the same reason.

However, please see also Notice 725, Single Market (the curent edition is Feb., 2011), section 13. If the criteria at 13.5 are met, then the Limerick supplier will not need to register for VAT in the UK, but can use the procedure at 13.9. The UK customer then accounts for UK VAT on receipt of the goods, as if they were an acquisition, as shown at 13.11.
Paragraphs 16 to 18 contain good guidance on record keeping a supplementary declarations.
It may seem a rigmarole, but the simplified procedure is much easier than the Irish business having to register in the UK.

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By vatconfusion
09th Jun 2011 20:52

So to clarify

Thank you so much for your answer.

Would you mind just confirming that I am understanding this correctly:

There is no way of supplying at zero rate.

To use the simplified proceedure:

UK supplier issues invoice containing VAT @ 20% to Limerick - nothing included on EC sales or Intrastat despatches. No notifications of triangulation required. In VAT return as UK sale.

Limerick Customer issues invoice containing VAT to UK final customer advises NETPU with copy to their customer.

UK end user accounts for VAT as acquisition from Limerick.

Limerick indicates triangulation on EC Sales.

Am I missing anything?

Thanks again

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By Rob Fox
10th Jun 2011 12:45

VAT and triangulation
Provided the criteria for triangulation are met, and the procedures shown followed, it works out that:
- the original UK supplier can zero rate the sale to the Limerick company (showing it's Eire VAT number on the invoice);
- the Limerck company can zero rate it's sale (for the Eire VAT return, showing the UK customer's VAT number on the invoice); and
- the UK final customer accounts for UK VAT acquisition tax on it's VAT return.

The intention is to avoid the administrative hassle of registering the Irish company fro UK VAT, and refunding it VAT charged by the first supplier. Provided all three are registered for VAT where they belong, there is no tax loss.

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By vatconfusion
11th Jun 2011 16:12

Got it

OK many thanks. I understand now.

Just out of interest do you know of any courses that cover this kind of thing?

 

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By Rob Fox
13th Jun 2011 09:32

VAT and triangulation
I haven't used them, but you could try this outfit; thesecodn one listed should cover triangulation:
http://www.uktrainingworldwide.com/course/VAT-Training-Course.asp?id=1

BPP is a well-known tax training provider and has a course coming up:
http://www.bppprofessionaldevelopment.com/productdetails.aspx?product=65...

There are a couple of free PowerPoint presentations on triangulation (2nd and 3rd in list) at:
http://www.pdf-txt.com/ppt/triangulation.html

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By vatconfusion
15th Jun 2011 20:52

Perfect

Thats great. Many thanks for all your help.

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By northernman
10th Mar 2016 17:20

This is a VAT Triangulation question (I think)

A supplier of goods based in Germany, has a customer based in Ireland. The German Supplier is invoicing the Irish Customer direct at present.

 

The Irish Customer does not have sufficient storage space, and are considering using a UK storage company for holding supplies until required by the Irish customer. The goods would be delivered to the UK storage company, and the UK storage company would be responsible for delivery on to the Irish customer.

 

The UK storage would prefer to not have the goods invoiced to them as this would impoinge on their cash flow etc, rather they would prefer that the German Supplier would continue Invoicing the Irish customer directly, and that the UK storage company be paid a holding / storage fee.

 

What are the VAT implications? The German, UK and Irish companies are all registered for VAT.

 

Thanks

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