Imagine the following situation: you import goods from China and sell them in the UK. You rely heavily on one particular delivery company to deliver them to your customers. But you’re in dispute with this supplier, who has stopped trading with your business. You, therefore, decide to get a friend to set up a limited company and create an account with the supplier.
The friend sets up the account and gives you the log-in code for the account so you can operate as you did before the dispute happened with the supplier – ie the deliveries continue. The friend’s company is VAT registered; the delivery business invoices your friend’s company (plus VAT); the friend’s company raises an invoice to you for the same amount (plus VAT). You claim input tax on your VAT returns. Is there a VAT problem?
What is a business?
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