Ordinarily we have our contract Italian manufacturer ship goods back to the UK or to other countries. Consequently no Italian VAT is payable. We now need to scrap some components that are obsolete. Because we have to pay the manufacturer for those components they plan on charging VAT as it will be a local supply. It seems crazy to ship out of country to avoid adding an extra 22% to what we are already having to write off. Does anyone have any ideas please?!
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You could have them shipped to the UK and scrap them here. It does have the possible benefits that you gain any scrap value and it prevents them leaking into the market.
Alternatively you could argue that you're not buying the product but paying them damages for not taking delivery of product you ordered. Under UK VAT law, that could put the transaction out of scope.
The third option is to suffer the VAT and make an 8th directive claim - see here:
https://www.gov.uk/guidance/claim-vat-refunds-from-eu-countries-from-1-j...
Do be prepared for a long wait before receiving the funds.
You're welcome. I'm not aware of any value limits on 8th directive.
Note the timelines on the linked page so that you don't get caught out (in short, applies to invoices to 31 December 2020 and claims by 31 March 2021).