Joint ventures and VAT

A joint venture is a commercial enterprise undertaken by two or more parties who otherwise retain their own separate identities. The parties to the joint venture usually bring together different resources and areas of expertise to help fulfil a specific project or business activity.

HMRC’s published guidance on how a joint venture is treated for VAT is as follows. Where two or more separate entities work together on a business or project as a joint venture, this may be considered by HMRC as a partnership. This can be the case even if there is no formal partnership agreement. If this happens, then a new and separate VAT registration would be required for the joint venture if the turnover of the joint venture is over the current £85,000 VAT threshold. The existing businesses would continue to use their individual VAT registrations for any business activity outside the joint venture.

The rules can be different if the joint venture is in place to buy, let or develop land. The terms of any agreement need to be carefully considered to determine the right way to proceed.

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