Readers’ forum: Double whammy

A UK client company was formed six months ago and is UK VAT-registered. It buys goods from EU suppliers for sale to private individuals in other EU countries.

So far about €90 000 of bedroom items have been bought VAT-free from a manufacturer in Spain. The Spanish business ships these directly to broadly equal numbers of private buyers in France and the Netherlands.

The distance selling thresholds of these two countries were not exceeded in 2015 so no local VAT registration is required in either yet. Acquisition VAT has been paid to HMRC under VATA 1994 s 13(4) and not reclaimed as input VAT in view of the ECJ decision in Facet Trading (C-539/08) and Revenue & Customs Brief 20/11 explaining that recovery would be available only if this was accounted for in the countries to which the goods were shipped. No UK output VAT has been accounted for because...