Intercompany Payroll Journals

Intercompany Payroll Journals

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By johngroganjga
28th May 2015 16:26

You see, to know exactly what
You seem to know exactly what the problem is, so I do not quite follow why you do not understand how to solve it.

The way to solve it is to reverse the incorrect entries that have already been made and replace them with correct ones.

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paddle steamer
By DJKL
28th May 2015 16:11

And possibly pray there is a group vat election otherwise the provider of the services to the other entities may not be accounting for vat correctly.

The danger with intercompany accounts (and we operate a fair few where not all entities are vat registered) is that because transactions are not entered by more routine procedures (sales day book) vat on these supplies can often get forgotten about.

Appreciate this is not your question, and may not be on point in your circumstance, but thought it worthwhile mentioning.

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Replying to lionofludesch:
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By neileg
28th May 2015 16:25

Not the way I understand it

DJKL wrote:

And possibly pray there is a group vat election otherwise the provider of the services to the other entities may not be accounting for vat correctly.

The danger with intercompany accounts (and we operate a fair few where not all entities are vat registered) is that because transactions are not entered by more routine procedures (sales day book) vat on these supplies can often get forgotten about.

Appreciate this is not your question, and may not be on point in your circumstance, but thought it worthwhile mentioning.

If one company is acting as paymaster for the 4 companies, then recharging exactly what has gone through payroll is not a VATable supply.
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Replying to fawltybasil2575:
paddle steamer
By DJKL
28th May 2015 23:47

Not aware of that, thanks

neileg wrote:

DJKL wrote:

And possibly pray there is a group vat election otherwise the provider of the services to the other entities may not be accounting for vat correctly.

The danger with intercompany accounts (and we operate a fair few where not all entities are vat registered) is that because transactions are not entered by more routine procedures (sales day book) vat on these supplies can often get forgotten about.

Appreciate this is not your question, and may not be on point in your circumstance, but thought it worthwhile mentioning.

If one company is acting as paymaster for the 4 companies, then recharging exactly what has gone through payroll is not a VATable supply.

I was not aware of that, thanks. Are the wages then treated as a disbursement or is there some other specific relieving position?

I have a client who runs distinct family entities with total payroll through one entity and recharges to the others, but we do this with vat invoices-no tax cost/loss as all can fully recover input vat, just a pain.

I have also been reviewing my employer's various entity payrolls, in anticipation of AE and not wanting numerous schemes. I have considered transferring all employees to one payroll with rebilling but as most of the entities are vat exempt have been concerned that the total rebilling might require vat registration re the entity charging and non recoverability by the paying entities, what you indicate might alleviate the admin/workload running multiple payrolls?

I suspect the reason I am cautious is I once got pulled up by HMRC re renting an opted to tax industrial unit to a film company for four weeks. I raised a vat invoice for the rent but the tenant also reimbursed us the rates due for the four weeks, being an industrial property rates only applied when it was occupied so the rates amount was not an apportionment of a bill in our name for the full year, it merely covered the bill issued for the four weeks of occupation. HMRC insisted I could not treat as a disbursement and that the supply re the rates was a vatable supply, following the main supply re the rental.

I believe with insurance that where a landlord recharge to a tenant is apportioned out of say a portfolio policy, rather than repayment of a distinct policy premium, the insurance follows the main supply re vat- or certainly HMRC seem to take this view.

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Replying to SteveHa:
paddle steamer
By DJKL
28th May 2015 23:55

Neileg, just found notice 700/34 re staff, thanks

Neileg

Re my above question a quick google using paymaster and vat led me to the above, really useful, I will now read carefully.

Thanks for the pointer, really appreciated.

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By neileg
29th May 2015 09:57

Hi DJKL

Happy to have been useful, for once!

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