VAT on service to intercompany

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Hi. I just want to check my understanding is correct please.

If a UK company (A) invoices another UK company (B) (that are intercompanies) for accountancy work, HR services performed by employees of company A etc, VAT would need to be added? The companies have different VAT numbers. 

If company A processes and pays an invoice for a phone bill as an example, and then recharges it to company B, this would also need need VAT added? Or would it fall under disbursements? Thank you 

Replies (5)

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By Sandnickel
15th May 2024 17:06

Yes, services will have VAT added. (Provided of course, the normal VAT rules apply).

A recharge will have VAT added, a disbursement will not. What you are describing sounds like a recharge, but you need to confirm that to ensure you apply the correct treatment.

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By Jason Croke
15th May 2024 17:27

I'd steer clear from seeing recharges as disbursements.

Quite a narrow definition and the services you described (phones) don't sound like disbursement type transactions, assuming A and B can reclaim VAT in full, then why risk treating as a disbursement and getting it wrong?

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By cpavett
15th May 2024 20:48

Yes, unless you register them as a VAT group.

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Replying to cpavett:
Ivor Windybottom
By Ivor Windybottom
16th May 2024 09:34

Do this!

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Replying to cpavett:
By paulwakefield1
16th May 2024 10:17

But also consider the commercial implications. Joint and several liability may be an issue if one entity is in a dodgy financial situation.

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