Our company provides materials and services to an associated company (shared ownership.)
The values are invoiced monthly and any VAT paid over as output tax. Our company submits monthly returns and is in a repayment position - our outputs are zero rated.
However, the associate has not reclaimed the corresponding input VAT on any of its returns. It is proposing to do so at the end of this month.
The situation is now that the associate is to be acquired for a notional sum and become a group company.
The inter-company balance will not be repaid and will be written-off as part of the acquistion.
Can we reclaim the VAT on the unpaid invoices without any problem?
Replies (4)
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No, but
the supplier company can either issue a credit note or claim bad debt relief to get the VAT back. I would recommend issuing a credit note.
If the debts are more than 6 months old ...
... then the VAT should already have been reversed by both companies.