Vat and Intercompany Accounts

Vat and Intercompany Accounts

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Hello I wonder if anyone can help with the following:

If you have Company A and Company B (Both separately Vat registered), (Both with the same Directors), but different types of work.

There are 2 scenarios I am a little uncertain about:

Firstly:

Company A receives a Purchase Invoice  including VAT for Stationery for example.

Company B pays the bill in error.

Do I purely post the whole amount to the inter company loan account, showing that Company A owed Company B some money, with the total amount being a loan?

Secondly:

Company A raises a Sales Invoice including Vat.

Company B receives the funds from the customer in error.

Does Company A just post the total amount to the inter company loan account, showing that Company B owed Company A some money?

Or does some sort of invoicing have to go on in order to reclaim it, and if so, is the VAT added on top of the whole amount, or can it be split as it was net and Vat originally?

There have been a few queries of this nature on this site, but I couldn't find one that answered the above.

Many Thanks in Advance

Carolynne

Replies (5)

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By User deleted
30th Sep 2011 20:56

The simplest

solution is, as you say, to take the gross amounts to the inter-co loan account. There are no VAT complications.

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By James Hellyer
01st Oct 2011 20:38

VAT group

Why not be a vat group and file one return? Inter-company transactions are then outside of the scope of VAT.

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By Carolynne
02nd Oct 2011 18:02

Vat & inter company accounts

Unfortunately, I don't know why they aren't one VAT group as haven't started the work yet, will find out next week.  Just one more thing though:

Does it get complicated if for example a supplier raises an invoice for Company A that is really for Company B.  Company A pays it, as it is in their name.  Would company A then just put the net of VAT amount to the inter company loan account?  As the in/out VAT would have to go through their own return.  

And more importantly, are there any complication in this, as the supply was not for the use of Company A?

I don't know if this has happened, I am just trying to get things sorted in my head before I go out to see them.

Many Thanks.

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By User deleted
02nd Oct 2011 18:09

On that second point

Company A should raise a VAT invoice to B.

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Replying to Andrew288:
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By Carolynne
03rd Oct 2011 17:22

Vat & inter company accounts

I thought so, but you now how sometimes you just need someone to confirm what your thinking.

Thank you so much to BKD and all who have contributed, I feel confident about it all now.

Carolynne

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