Help please

Rachel
Rachel FMAAT, AAT Licensed Accountant Posts: 349 Dedicated contributor ? ? ?
Hello

I have just had an enquiry from a potential client and sell refurbished vans. There customer preorders and they make to customer spec. Client buys the van and the parts to refurbish, and passes it over to the refurbisher. My issue is with invoicing the refurbisher invoices the customer for his part and my client invoices for their part.

I suppose really there wouldn't be an issue apart from the refurbisher is not VAT registered.

Can you take it that my client provides the raw materials which the client pays for and the separate the refurb? Or is it VAT avoidance?

The only similar example I can think of is carpet right and the fitters.

Thoughs appreciated

Comments

  • reader
    reader MAAT, AAT Licensed Accountant Posts: 1,037
    Rachel wrote: »
    Hello

    I have just had an enquiry from a potential client and sell refurbished vans. There customer preorders and they make to customer spec. Client buys the van and the parts to refurbish, and passes it over to the refurbisher. My issue is with invoicing the refurbisher invoices the customer for his part and my client invoices for their part.

    I suppose really there wouldn't be an issue apart from the refurbisher is not VAT registered.

    Can you take it that my client provides the raw materials which the client pays for and the separate the refurb? Or is it VAT avoidance?

    The only similar example I can think of is carpet right and the fitters.

    Thoughs appreciated

    Although HMRC frown upon artificial separation I don't really see a problem hear unless your client and the refurbisher are the same people, or your client and the refurbisher work out of the same premises/use the same equipment, or the client and the refurbisher appear from the outside to be one organisation/business, or your client only deals with VAT-registered businesses while the refurbisher is only there to deal with the non-VAT registered clients, etc.

    Do you have grounds to believe HMRC would be able to successfully argue that your client and refurbisher are really one business that have artificially been split?
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