This is a totally hyperphetical situation, but would there be anything wrong with a company structure as follows?
John Smith sets up two VAT registered companies
"Company A" Set-up in UK
"Company B" Set-up in EIRE
So, a customer buys a product from "Company B" via a company rep in the UK, The rep then passes the order on to "Company B" to process to order and buys the goods from "Company A". "Company A" then sends the goods to the "Company B" UK rep, who passes the goods on to the costomer.
Well my question is, as both companies are making sales to another EU country, would that mean that no VAT should be charged on such sales?
Also, as "Company B" is in Eire, and if it bought from "Company A" at cost could it mean that corporation tax is only paid by "Company B" at only 12.5%???
Orry Clayton
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Is there anything wrong?
Yes, and yes.
As pointed out, if the end-sale is to a non-VAT registered person, company B will need to charge Irish VAT.
As for rates of corporation tax, I suggest you read up on transfer-pricing rules.
Didn't Richard Branson try something similar?
RBs autobiography contains a tale involving records (remember them) and an export contract to Europe.
As he never quite got around to getting on the ferry, the Inland Revenue (in those days) became somewhat disenchanted.
So much so that they fined him.
In this case as the supply is from company B in Eire to a UK customer, unless they know the VAT number of the end customer, they must charge VAT.