VAT

Hi My friend is the sole owner of two companies one of them is a holding company. The holding company doesn't charge VAT on the sale invoices when selling something to associated company but associated company charging VAT on sale invoices when it sells something to holding company (As per his accountant said and my friend is not satisfied with his reason). Kindly confirm me, is he doing right accounting treatment for VAT? The both companies are individually registered for VAT (not group VAT register).

Hi,

The only exceptions where VAT would not be charged is if there were internal charges within the same legal entity or if there was was charges between companies within the same VAT group.

Please see below:

VATSC02140 - Basic principles and underlying law: Transactions which fail to be supplies and supplies disregarded for VAT purposes

Group and divisional registration (VAT Notice 700/2): 5. Group registration — accounting for VAT

Thank you.