- Uncontrolled intercompany recharges can pose a risk to businesses, especially those that are partially exempt.
- Without proper documentation, recharges can go unnoticed, resulting in underpaid VAT and penalties.
- B2B supplies of services are generally supplied where they are received.
- There are exceptions to this rule, such as land related services.
- A supply for VAT purposes can occur even without consideration under specific conditions.
- VAT can be due even without an exchange of payment in barter transactions.
- Recharges between members of a VAT group or between branches of the same legal entities are not within the scope of VAT.
- Recharging staff between connected companies is generally subject to VAT at the standard rate.
- The VAT liability of a supply needs to be determined, particularly for financial services exemptions.
- Companies need to consider whether there is a single supply or multiple supplies with different VAT liabilities.
- Collaboration between Tax and Finance teams is crucial to manage intercompany recharges effectively.
Source: mha.co.uk
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
