My UK client provides advertising/PR services. It has recently started providing one of its customers, a UK-based drinks manufacturer, with customised bottles (i.e. goods as opposed to services). These were supplied from Ireland and delivered by the Irish supplier straight to the end customer's bottling facility in France. The supplier invoiced the client in full (month 1) a few months before the delivery (month 5), and also required a 20% deposit to be paid at the outset (month 1). My client invoiced its customer for the deposit only (month 1), with the balance invoiced after delivery had been made (month 6). Unfortunately it has only just come to light that the goods were delivered to France, and the last VAT return was prepared on the basis that the goods were delivered to the UK. As such, the Irish purchase was recognised as an EC acquisition and the sale on to the customer was recognised as a normal UK sale with VAT. I am struggling to get my head around the process to correct the error, and how to deal with these transactions correctly going forward - any feedback/thoughts gratefully received.
To correct the error
As the purchase involves goods located outside of the UK when supplied (i.e. Ireland/Australia to France), I plan to correct the next VAT return (not material enough for a 652) so that the EC acquisition is reversed and the goods are excluded from the VAT return altogther as outside the scope of UK VAT (net impact nil). The overdeclared VAT on the sale will need to be reversed also, and the refund paid back to the customer along with a credit note for this amount for them to correct in their next VAT return also, in which they will need to include their own purchase as an EC aquisition rather than a UK purchase.
Client will also need to register for VAT/TVA in Ireland and France as well as it is supplying goods located in Ireland (the 20% deposit) and in France (the 80% balance). It needs to issue invoices to its UK customer showing its Irish/French VAT/TVA number (and reissue the historic invoice), but with zero VAT as these will be EC acquisitions. VAT returns and EC Sales Lists (and potentially Instrastat) will be required in both countries, but with nothing pay as all entries will be EC sales/acquisitions.
A few other thoughts....
I am thinking it would be better for my client not to issue invoices for the deposits, but rather to ask for payment on a proforma basis and then it won't need to remain registered in Ireland. Have I got this right?
I can't get my head around whether any of this counts as consignment stock at any point in the process and whether this would make a difference to the above.
What would be the impact of sourcing these goods from Australia as well which the client is considering? This would incur VAT on the import to France, but this would be recoverable if the client has to register for French TVA anyway. Presume no requirement to register for Australian VAT??
Does anyone have experience of dealing with French TVA and submitting returns there? As a sole practitioner who only speaks schoolgirl French, I am wondering if this is straightforward enough if I use Google translate or if I should get help from a specialist?
Help please (and sorry for the length of the post)!!!