Commentary

V7.419 Supply—warranties

Part V7 Tax planning
Part V7 Tax planning | Commentary

V7.419 Supply—warranties

Part V7 Tax planning | Commentary

V7.419 Supply—warranties

A warranty arrangement is very common with the supply of many goods and, in the case of extended warranties, has proved particularly profitable for companies that trade in electrical goods.

The first situation that normally occurs is where the manufacturer or supplier gives a guarantee, for example, for the first 12 months that any repair or defect to the goods will be repaired without charge. In this situation, all parts and labour supplied by the manufacturer or supplier are not charged to the customer – and no VAT is therefore due.

The situation that can cause complications is where a

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