Intercompany VAT

Advice for Intercompany VAT

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Hello

I have a company within the UK which has no sales and is funded by its head office company in Germany.

They have been paying directly some salaries and expenses.

The double entry I have been posting is Overhead expenses + any VAT paid - intercompany account on balance sheet

Should I be added VAT to this???

 

Thank you very much

Replies (2)

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ALISK
By atleastisoundknowledgable...
09th May 2018 18:06

“They have been paying directly some salaries and expenses.”
Do you mean the German company paid the expenses?

Is the uk company vat registered? Is it able to be? The UK company can reclaim the vat if it’s registered and the invoices are addressed to the uk company (albeit paid by German co).

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By Sam Beedle
10th May 2018 13:34

UK to UK company the payroll and expenses payment made by one company on behalf of another group company is outside the scope of VAT. However the staff contracts need to be with your company, no joint contracts, and the recharge has to be on an exact basis i.e. gross wages plus employers costs only. No fee's for processing.

If the above doesn't apply then you may fall into the agency / supply of staff rules in which case it could be partially or fully VATable.

Regards cross borders I would say this was a service and as you are the customer your location (the UK) will be the place of supply. Therefore where VAT applies, so I would say its outside the scope still.

I use to have a link that confirmed this on the HMRC website but now we have Gov.uk I can't find it. I will keep looking and post if I come across.

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