Issue 13: Recharged Expenses #MR. VAT
This one often creates a bit of confusion so I am going to break it down for you.
Where you have two companies sharing expenses by one recharging to the other, it is a simple process if both companies are VAT registered.
However, where one company (company B) is not VAT registered, it is better to have the registered entity ( company A) bear the full cost of the vatable expense and then recharge a portion of it, plus VAT, to company B. Otherwise if company B is the main purchaser, the VAT on the expense will be totally lost and thus irrecoverable.
More on this next week….