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Income passed over inter company - VAT?

VAT treatment


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)...


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By Matrix
16th May 2018 14:34

The parent should invoice the paying company. If they are VAT registered then VAT should be applied if it is a taxable supply unless they are in a VAT group.

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16th May 2018 16:16

What do you mean by 'privatised'? Is this selling off a business to a third party? If so why do you refer to the 'parent' organisation??

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to chicken farmer
16th May 2018 17:15

What he said plus what sort of public sector body? Academy, local authority, NHS...

And who did the end customer that provided the income think they were dealing with?

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