Can I use a SPV to reclaim VAT?

using an SPV to reclaim import VAT

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Hi

I am importing goods from outside of the EU to be sold in he UK through my company which is not VAT registered. As such a cannot reclaim import VAT. I was wondering if I can set up a VAT registered  SPV to import the goods and pay VAT. The SPV will then reclaim VAT. It will also sell the goods at a nominal value - say £100 (and charge VAT on the sale) to my other trading company which is not VAT registred and account to HMRC for the VAT (£20) charged on the sale. The trading company will then sell goods to end consumer and not charge VAT as revenue will be below £83k threshold. Is there any problems with this proposal? 

Replies (10)

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Portia profile image
By Portia Nina Levin
10th Aug 2017 15:57

No. Sounds completely fine. What could possibly go wrong?

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By mrme89
10th Aug 2017 16:17

It doesn't quite work.

For it to work, it'll need to be located in Jersey, with a subsidiary in the tax free haven of Luton and a holding company in Uganda.

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Replying to mrme89:
Portia profile image
By Portia Nina Levin
10th Aug 2017 16:50

Ugandan holding companies are incredibly passé.

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paddle steamer
By DJKL
10th Aug 2017 16:45

It really depends on the Mysterons, but using an SPV is heading in a backward direction.

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By D V Fields
10th Aug 2017 17:07

Be sure to give the business activities of the new company when you register. You should then get a definitive answer from HMRC.

Remember there isn't anything special about a Special Purpose Vehicle (SPV) other than possibly the needs of its inventor to create illusion.

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RLI
By lionofludesch
10th Aug 2017 18:27

If only Captain Black were still active on this forum.

He'd know.

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By Accountant A
10th Aug 2017 18:37

Denis Healey, former UK Chancellor of the Exchequer once said “The difference between tax avoidance and tax evasion is the thickness of a prison wall.”

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chips_at_mattersey
By Les Howard
10th Aug 2017 18:59

Since you control both companies, I would not recommend such an arrangement.

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Replying to leshoward:
Portia profile image
By Portia Nina Levin
11th Aug 2017 10:35

You can't seriously be suggesting that this is just fraud Les?

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Replying to Portia Nina Levin:
chips_at_mattersey
By Les Howard
12th Aug 2017 16:02

No, it is not fraud.
But it is open to HMRC challenge.

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