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Is a German parent company correct to charge VAT on UK subcontract work?
Our client is a company that is VAT-registered and is based in the UK. The company owns a range of commercial properties that are rented out long term and all the properties have an option to tax in place.
The directors recently decided that all the repair and maintenance issues relevant to the properties would be undertaken by the client’s parent company based in Berlin which would recharge the UK company for costs and labour.
The Berlin company has no staff or office in the UK and all labour is subcontracted. However it has acquired a UK VAT registration with HMRC and has been claiming input tax on UK costs which have been recharged to my client with VAT added.
My concern is that the above procedure is incorrect and that the German company should not have a UK VAT registration because it is based in Germany....
