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Posted Fri, 03 Feb 2023 07:43:48 GMT by George Diamondis
Two UK registered companies have joined in a JV to provide technical services to a client in Angola. Company 1 will invoice the foreign client and be paid by them. Company 2 will invoice Company 1 for its share of the revenue. It is clear to me that Company 1's revenue is not subject to UK VAT as both the client and place of service are foreign. Company 2 also provided their services in Angola but are invoicing a UK company. Will company 2 have to charge UK VAT? There will be ongoing transactions under this structure so advice on how to properly structure this will be greatly appreciated. George
Posted Fri, 03 Feb 2023 17:43:02 GMT by Jason Croke
Useful guidance here as you have to first decide if you are e genuine JV which HMRC see as a partnership and would mean Companies 1 and 2 register for VAT as an informal partnership/JV. Place of supply is where your customer is, based on what you've posted, Company 1 is making a supply in Angola and outside scope of VAT as you have stated. Look at the contractual the Angolan customer really signing two contracts - one with Company 1 and one with Company 2? From what you describe, only Company 1 is invoicing the end customer, that suggests Company 1 has the "contract " to do business with Angola and Company 1 is sub-contracting some of the work to Company 2 so in that scenario Company 2 isn't making a contractual supply to Angola, but to Company 1. If the contract states both companies are contracted to the end customer, then why is Company 2 invoicing Company 1? You need to be clear in your mind as to what is going on here contractually - that is look at who is supply what to Angola, either both companies are contractually required to supply X and Y or there is one contract with one company....once you figure that out, then the answer will reveal itself. Sidenote, Angola operates a withholding tax depending upon what sort of services are being supplied, so just make sure both companies are aware of any other tax implications.
Posted Mon, 06 Feb 2023 11:37:06 GMT by HMRC Admin 17

There are clearly two supplies taking place.

The first supply would be Outside the Scope of VAT if the supply is a Business to Business supply and the supplies are of
a technical nature and come under the General Rule of services.

Please see the information below:

Place of supply of services (VAT Notice 741A)    .

The second supply would be a supply where the Place of supply is in the UK as both companies belong here
and so VAT would need to be charged.

As regards the set up of the Joint Venture please see the information below which will help you decide whether a partnership
would need to be created to deal with these supplies:

VAT Registration    .

Thank you.

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