Readers’ forum: Is VAT due on profit share for joint venture agreement?

One of my clients is a builder and his company has formed a joint venture (JV) agreement with another company that owns a plot of land. My clients will get planning permission on the land and do all the building work so that the JV can build and sell 12 new houses sharing profits on a 50/50 basis.

My questions are: 1) presumably the JV can register for VAT and claim input tax on professional fees and building materials? The labour will be zero rated so there is no input tax to claim here; and 2) when the project has been completed it is expected that my client’s profit share will be £750 000. Should his company issue an invoice for £750 000 plus VAT to the JV or is it outside the scope of VAT?

Query 20 394 – Speculator.

Is this venture a ‘partnership’?...