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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4351
Experience:  FCCA FCMA CGMA ACIS
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Pleas help Our Company has joined 2 other Companies to

Customer Question

Pleas help
Our Company has joined 2 other Companies to form a Group. The main Company have
now started to pay the wages of our Company and have charged VAT to our Company. This amount could cause a cashflow problem as the VAT will be paid at the end of every month and will not be claimed back until the end of a quarter.
I have spoken to our own personal Accountant and he says they should be going down
the path of an Intercompany loan basis as VAT would not be involved.
The next worrying part is that I read on the internet that the VAT amount paid on the wages could not be claimed back by the charged Company. Help!! Tried to ring VAT
but can never get through as thee is always a message saying they are experiencing a high number of calls back
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. I really do not see the problem, the VAT charged for the service is proper and should be reclaimed as an input in the usual way. Your accountant's approach will merely create a whole palaver of accounting for inter company loans, akin to rearranging the deck chairs on the Titanic with little effect on the company's cash flow. It is one of these situations when you simply have to lump it for a quarter. I do hope you find my guidance of use.