Invoicing

Invoicing

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There are two companies. They are in the same financial reporting group, and also in the same VAT group.

Is there anything to prevent the processing of invoices received in the name of one company through the purchase ledger of the other.

After processing in the purchase ledger, there would be a recharge back to the originally invoiced company.

Thanks
David Peach

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By AnonymousUser
10th Mar 2002 19:25

OK for VAT groups - but don't do it!
Jay and Janet appeared to have ignored the VAT Group part of the question. Essentially there is no immediate effect for VAT, but could be at a later date if one of the businesses de-groups or if a capital good is disposed of.

Jay perhaps ignored the issue because of the common law and Inland revenue problems. I and any lender want to know why the accounts were being artificially inflated (sales & purchases).

As a VAT group, your client is doubtless large enough to use software with a multi company facility. Even Sage packages can be set up for this. Alternatively, use separately identifiable cost centres within the one purchase ledger.

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By AnonymousUser
05th Mar 2002 15:58

VAT recovery
In VAT terms it doesn't really matter. As both companies are in a VAT group all supplies made by and to group memebers are treated as supplied through the representative member. The recharge between the companies will be disregarded for VAT purposes as it is intra-group.

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By AnonymousUser
05th Mar 2002 13:31

David what are you trying to do?

I don't see the logic! Why would anyone knowingly enter the invoice in the wrong company and then do a recharge?

It is not allowed under common/contract law and under Revenue Law in that you can't claim Vat on an invoice if it is not in the company's name.

David it is not worth it and as accountant you don't want the hassle of correcting these accounting entries!.

Hope this helps.

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By User deleted
05th Mar 2002 16:01

Similar problem
Had a similar situation when using the purchasing power of one company to make purchases for an associated company. The VAT inspector insisted that invoices addressed to one company should be re-invoiced to the second company. You charge the same VAT so it balances out, but it is a lot of hassle ensuring that re-invoicing is completed.

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