Seems accountants have been incorrectly stereotyped for being boring all this while.
It was fun reading all your comments. Now please allow me to put the case to rest.
The concerned individual here has been a consultant on site for our client who used to invoice via his own company which has since been closed down as he has retired. In this one instance, he helped out with some site matters and as goodwill gesture, the company paid him. Note that there was no obligation to pay as no invoice was raised.
The outcome here is that due to his previous relationship with the company, this payment can certainly be expensed as a consultancy fee.
Technically, the asset is owned & operated by Company B although Co A might be the legal owner. But from my understanding, accounting transactions should be recorded with the principle of substance over form to reflect the real scenario. In this case, since most of the benefits out of that van are derived by Co B and the insurance, drivers are all under Co B, should the asset be not shown on Co B as opposed to Co A?
What I meant to say by financial intermediary is, Co A just serves as a tool to raise the finance for the van and then recovers the cost of same from Co B.
Thanks Jason for your inputs. Really appreciate them.
The vat return we are currently processing is ended Feb-21 and it is only now that we got to dig into the rules for this one offshore client. Normally, the client sends us a record of their sales to GB customers on which 20% vat is paid and this was then filed with HMRC.
This quarter, they have not sent us Jan-21 onwards sale record reason being brexit rules no longer require them to account for vat on sales to GB customers which is why I wanted to clarify the rules.
With regards to VAT reg. in UK - Yes, they had crossed the threshold long ago which is why they have to charge UK Vat on sales here.
But my question still remains - if the sales to UK customers are to be zero rated then do they need to be even declared on the UK Vat return? Which is why I asked if this means they should be deregistered?
My answers
In the seller's books
Seems accountants have been incorrectly stereotyped for being boring all this while.
It was fun reading all your comments. Now please allow me to put the case to rest.
The concerned individual here has been a consultant on site for our client who used to invoice via his own company which has since been closed down as he has retired. In this one instance, he helped out with some site matters and as goodwill gesture, the company paid him. Note that there was no obligation to pay as no invoice was raised.
The outcome here is that due to his previous relationship with the company, this payment can certainly be expensed as a consultancy fee.
I thank you all for your time.
Technically, the asset is owned & operated by Company B although Co A might be the legal owner. But from my understanding, accounting transactions should be recorded with the principle of substance over form to reflect the real scenario. In this case, since most of the benefits out of that van are derived by Co B and the insurance, drivers are all under Co B, should the asset be not shown on Co B as opposed to Co A?
What I meant to say by financial intermediary is, Co A just serves as a tool to raise the finance for the van and then recovers the cost of same from Co B.
Thanks Jason for your answer. Good day :)
Thanks Jason for your inputs. Really appreciate them.
The vat return we are currently processing is ended Feb-21 and it is only now that we got to dig into the rules for this one offshore client. Normally, the client sends us a record of their sales to GB customers on which 20% vat is paid and this was then filed with HMRC.
This quarter, they have not sent us Jan-21 onwards sale record reason being brexit rules no longer require them to account for vat on sales to GB customers which is why I wanted to clarify the rules.
With regards to VAT reg. in UK - Yes, they had crossed the threshold long ago which is why they have to charge UK Vat on sales here.
But my question still remains - if the sales to UK customers are to be zero rated then do they need to be even declared on the UK Vat return? Which is why I asked if this means they should be deregistered?
Let me have your thoughts
Thank you :)
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