Our client, company A, is a UK VAT registered company which introduces customers to property developers based in the UK.
Company A will charge the property developers commission once the sale of the property has been completed. These commissions include VAT.
There are 4 possible scenarios here:
A UK based customer purchasing a UK property.
A UK based customer purchasing a Dubai property.
A Dubai based customer purchasing a UK property.
A Dubai based customer purchasing a Dubai property.
Company A receives reservations from all customers. These reservations are held by Company A as a liability until the sale of the property is either completed or falls through.
If the sale is completed, the reservation fee is refunded to the customer. If the sale falls through, the reservation fee is non-refundable to the customer. This is detailed in the contracts.
Once a reservation is considered non-refundable, it is realised as sales. The issue here is determining whether there should be output VAT on the reservations once they are recognised as sales.
Also, the treatment is likely to be different depending on each of the 4 scenarios above.
Could someone please advise me of the correct VAT treatment for each scenario.