Taxation logo taxation mission text

Since 1927 the leading authority on tax law, practice and administration

Readers' forum: On the waterfront

09 October 2018
Issue: 4667 / Categories: Forum & Feedback

The VAT liability on a turbine repair.

Our company is contractually due a payment from our supplier. Perhaps we could describe it as a payment under a warranty relating to a turbine located offshore. The intention under the contract is that the supplier should contribute towards the costs of bringing the turbine from offshore and delivering it to the quayside. The machine is then handed over to the supplier who is responsible for repairing it before returning it to our company to be reinstalled.

Ownership of the turbine remains with our company but the turbine supplier has sole responsibility for completing the repair.

The payment is a fixed amount and is unrelated to the actual costs of delivering the turbine to the quayside.

When we invoice the turbine supplier for this payment should we consider it a compensatory payment and therefore outside the scope of VAT? Alternatively has a supply of services taken place...

If you or your firm subscribes to Taxation.co.uk, please click the login box below:

If you are not a subscriber but are a registered user or have a free trial, please enter your details in the following boxes:

Alternatively, you can register free of charge to read a limited amount of subscriber content per month.
Once you have registered, you will receive an email directing you back to read this item in full.

Please reach out to customer services at +44 (0) 330 161 1234 or 'customer.services@lexisnexis.co.uk' for further assistance.

back to top icon