As mentioned above, im looking for advice on charging for employees time between my two companies.
Given that employees of company 1 work on/in company 2 50% of there time, can Comapny one charge comapny 2 for half there saleries & costs? Im sure it can so the next question is how to account for this. i guess company 1 could raise an invoice on company 2, but given both are VAT registered do i need to charge VAT or is there a inter company transfer that works better in this situation?
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Of course Co1 can recharge Co2. In fact they probably should.
Yes you should raise an invoice and if they're separately VAT-registered, then you must charge VAT.
Your accountants will be able to give you fuller advice on this.
Is this the first year the issue has arisen?
If in prior years 50 % ( or what ever )of payroll and associated costs, wide ranging I may add, were not a cost of the trade of Company 1 was tax relief erroneously claimed?
Like wise company 2 may have had super after tax profits . distributed as dividend .. in part to company 1 and in part to outside shareholders.
The super profits only arising due to poor accounting and cost recognition.