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Readers’ forum: Twist to the tale

07 April 2020
Issue: 4739 / Categories: Forum & Feedback
VAT dilemma with machine sale.

One of our clients hires out expensive equipment to customers in the construction industry. The client is UK-based and is a trading subsidiary of an American parent company.

In 2017 a piece of equipment valued at £750 000 was imported from the USA to UK and declared as an import for VAT and duty purposes. The equipment remained under the ownership of the American parent company which has been making an annual rental charge of £100 000 to the UK company. For ease of administration my client arranged to be the importer of the equipment and claimed input tax of £150 000 on its June 2017 VAT return supported by a C79 certificate.

Is the UK company correct to claim this input tax on the basis that it has only rented and never owned the equipment? Also my client has...

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