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Pre-registration VAT claim - Good or service

Pre-registration VAT claim - Good or service


A client bought a franchise and then registered for VAT. The franchise fee is for a five year agreement.

Can the client claim this as a good or is it a service? As far as I am concerned its an intangible good as it is a resalable asset but in HMRC's guidelines the tangibility of a good is not mentioned. I have stripped out any training etc received as part of the agreement and treated this as a service.

Has anybody any advice?

Thanks in advance.


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10th May 2012 17:15

Franchise fee is thec supply of services and VAT can be recovered on services purchased 6 months prior to registration and for goods on hand at date of registration subjectv tio having necessary evidence

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10th May 2012 18:44

Article 14(1), Council Directive 2006/112

The tangibility question is dealt with in the EU Directive:

"Supply of goods" shall mean the transfer of the right to dispose of tangible property as owner."

There are some other provisions in that Chapter of the Directive requiring some things - such as electricity and gas - to be treated as tangible property; but I can't identify anything that would extend the defintion to a franchise free I'm afraid.



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