There is a ‘sale or return’ if a customer receives goods from a supplier, but the supplier retains ownership of the goods until they are adopted by the customer. The customer has the right to return the goods at any time.
There is a sale or return if, for example, a manufacturer provides a demonstrator product to a retailer who may display the goods in his shop and show the benefits to potential customers.
12-month time-limit from removal of goods
As the goods remain the property of the supplier, generally no VAT is due until they are formally adopted by the customer. Goods supplied on approval or sale or return or similar terms are treated as being supplied when it becomes certain that the supply has taken place.