VAT on joint venture arrangement

VAT on joint venture arrangement

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Company A is a small newly formed building company

Company A enters into a joint venture with company B which is owned by a wealthy individual.

Client A pays sub contractors subject to CIS scheme

Company B lends company A the funds to pay the SCs but no profit element. Invoices are not raised.

The costs of the SCs are funded by a loan from company B

When the project is complete company A will debit its costs to J V account

When the project is complete company B will debit its costs ( property purchase and materials) to J V account

The joint venture profit will be shared equally between the two companies.

The property will be sold by company B which owns the property but the completion statement will show an amount due to company A for its share of JV costs and profit

What is the VAT position?

Colum Jezierski

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