We have privatised a number of activities within a public sector organisation.
Whilst being transfered, the income has been banked by the parent organisation. The activity within has been VAT'd at source, with net income being proposed to be handed over.
The organisation will be paying the VAT element to HMRC prior to passing it over.
Is this correct? Or is there an obligiation for the legal entity to pay the VAT element (and therefore pick up gross income)?
I would prefer net income (largely as I am not convinced of thier VAT procedures)...