I would say yes. What's happening here is - B is clearing its debt, but instead of passing the money over to A, it is accepting it back as payment for shares.
One assumes that B has had the use of the vatable goods and services and not returned them, and B could have claimed the VAT already if they are on standard basis. HMRC wouldnt be happy that one claimed, and the other didn't pay.
I am back on the subject of VAT due on conversion of shares to clear debt. The shareholder of a company has just told me that he believes the VAT is not due until the shares convert to cash. That is not due until the first quarter of next year.
The company who is offering shares is due to be listed on NASDAQ next year so I am told the shares will not convert to cash until then.
I need someone to clarify this as I have a VAT return to do by 7th September and need to know if this has to be included on the return or not.
My understanding is that a supply has been made, and a consideration received therefore the VAT liability is due.
Consideration does not have to be in money.
If the outstanding account had been paid in goods, that would be deemed as payment (consideration) not when those goods were converted into cash by selling them.
The same with the shares. They have been accepted as payment for the goods supplied not the cash they will (or not) generate at a later date
This is just my opinion. It might be worth contacting HMRC for clarification
