10 May 2019
My new client manufactures engineering parts and sometimes has to engineer a machine tool first to enable production to go ahead. They make a charge to the customer for this stage, in addition to the charges they make for the goods they then manufacture and supply. They have entered into a contract with an American company to supply some parts that will be shipped out to the US for the motor industry. We are happy that the client can zero rate the supply of the parts that are exported, but the customer has requested that the machine tool is also zero-rated. I know the customer is a US company, but the tool is remaining in my client’s premises in the UK; what reason could there be to zero-rate it?