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A US-based company which manufactures and leases out expensive machinery in the UK plans to import a major piece of equipment into the UK (worth £2m) and lease it for ten years to a UK company for an annual charge of £300 000. At the end of the ten-year period it will be sold in the UK but almost certainly not to the hiring business. The expected sale at the end of the ten-year period will be £250 000.
Should the US company register for VAT in the UK to claim input tax on the import of the machine (supported by a C79) or should it claim this VAT instead by making a Thirteenth Directive claim and then the customer would deal with the VAT by making the reverse charge on their own returns? And what happens when the...
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