There’s a lot going on in the VAT world at the moment, so Revenue and Customs Brief 15/2020 issued by HMRC on 2 October 2020 is probably not on your bedtime reading list.
This Brief covers a very practical issue, looking at situations when import VAT is reclaimed by a VAT registered business or organisation on goods it does not own. This should not happen unless the importer is acting as agent for the owner, so claims input tax and charges output tax when the goods are resold in the UK (s 47, VATA 1994).
True story – lease of equipment
About six years ago, a Chinese based company imported some equipment into the UK worth £1m. Let’s say duty of £100,000 was paid and VAT of £220,000 on the duty inclusive figure. The equipment was leased by the Chinese company to a VAT registered UK business for an annual fee of £250,000. What are the VAT issues?
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