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double entry for management services charge

Between a holding company and it's subsidiary there is a MSA allowing the holding co to recharge service fees up to £100k plus VAT for services rendered. 
When the Holding Co raises it's invoice what is the double entry? Does the 100k go to revenue (20k to VAT and 120k to interco debtors) and in the limited company does the invoice get coded as 100k to costs (20k VAT and 120k creditors)? Or does each company charge their invoices to the intercompany so they net off on consolidation?

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By DJKL
03rd Jun 2019 17:11

Post to the expense and income accounts otherwise you will forget/lose the transaction when you are preparing the individual company accounts.

Adjust out within the consolidation schedules and net off for that purpose only- the transaction exists except upon consolidation.

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