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.
In some instances, such supplies can be made subject to the Reverse Charge. See this link: https://www.gov.uk/hmrc-internal-manuals/vat-place-of-supply-services/va...
But the rules may be different in France and the UK!
The DMU have an Extra Support team, who may be able to assist. I have found them to more supportive than the usual DMU staff.
This link appears to provide a solution in relation to cross-border land-related services.
But I would seek specific advice, to double-check the interaction of the legislation.
If HMRC argue for a penalty for 'careless behaviour,' then request a suspension of the penalty.
If delivery is optional it is standard rated. (Your no.1)
If delivery is mandatory then apply the same apportionment as the order. (Your no.2)
A valid VAT invoice is only required if you are claiming input tax.
I think those sales should be included on your EC Sales List.
If you make supplies which would be taxable if made in the UK, you can register and claim input tax. S26 (2) applies; see VIT11500 in the HMRC Manual.
Is A eligible for bad debt relief? Yes. Unjust enrichment does not apply.
Should B adjust for its input tax? Yes. Use form VAT 652 to adjust.
I am not sure you can apply the Option to Tax.
And you may be subject to the Capital Goods Scheme.
As above; do look for detailed paid-for advice on such a project.