Hi, I am a VAT Consultant, working mainly with charities. I am based in Cambridgeshire
I have over 20 years experience in VAT, and am currently also a part-time member of the Tax Tribunals.
There is a technical question as to whether Spain operates a reverse charge for land-related services, and whether that would apply in this instance.
If the client is likely to continue to do this sort of transaction, a new legal entity in Spain is an option.
If he is exempt he cannot register for VAT nor recover his input tax.
Whether he is exempt depends on whether he delivers education or personal tuition. Or if it falls within one of the Government training schemes; Notice 701/30, chapter 13.
I would be surprised if the middleman's supplies were exempt. But more details as to contractual position will help with liability and place of supply.
Yes, it is irrelevant that the supplier is not registered.
Tax Point rules in Notice 700 are the place to start.
And VATTOS5100 in the HMRC Manual.
Sales made to EU and non-EU are excluded if the customers are in business.
Purchases from EU and non-EU suppliers are added to your taxable supplies for registration purposes.
My approach is to ask; "Does the transfer involve a business which is capable of operation?"
I think not due to lack of staff and stock. The new owner cannot run the business immediately, without substantial investment. So I conclude that the sale is of assets only.
Is the sale essentially the transfer of a business which is running? I think not, so normal VAT rules apply to the items sold.
… a flood of applications for the Annual Accounting scheme!
It depends on whether it was really a HP agreement, as per Sch 4, para 1(2). (I would not rely on HMRC advice on this point without seeing their letter!)
If, in reality it was a lease hire, then I would only refund a proportion of the input tax claimed, in line with the net amount paid.