VAT on recharges of exempt supplies

Hi there. If a VAT registered company pays for some exempt supplies (Say healthcare for employees like BUPA) for another VAT registered company of the same legal group (not VAT group), when the company recharges these costs should the intercompany recharge be standard rated VAT or should it be exempt or out of scope? Thanks!

Hi,

If these supplies are classed as recharges then VAT would apply to these recharges at 20%. However, if they meet the conditions of a disbursement then they would be seen as being outside the scope of VAT. You can see the guidance here:

Supplies made by or through agents: other situations

Thank you.