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VAT - Cash Accounting

I have a client who is the director of two companies, one is under their control the other is jointly controlled with two others. The first company invoices company two for consultancy. The first company is on cash accounting, the second on standard accounting. They don't appear to be associated for VAT purposes, however could HMRC deem this differently ?

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23rd Nov 2012 12:39

Cash Accounting

The fact that there is a common Director would establish a link between the two. The second factor is the extent of the 'advantage' which is gained by the arrangement you describe. If the invoices are monthly, and paid after 30 days, then the advantage is small; HMRC are, I suggest, unlikely to take action unless the sums were very large.

Apart from an Application for Registration, I don't know that there is any requirement to notify HMRC of the link between the companies, though.

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