I have a client who is VAT registered as one company (1), but has just started another company (2) (completly different) that is not registered for VAT.
I have noticed a few receipts being put through the company no.1 that relate to company no. 2.
I am presuming to reclaim the VAT through company no.1.
Some of the receipts are in the directors name only. Some are in the new companies name but have been amended by the director.
Can anyone give me some advise on this. How would you go about dealing with this.
Don't think there is going to be any easy answer to this, you already have your doubts about the legitimacy of the transactions, which in its self leaves you a bit vunerable.
Assuming there is no VAT connection between the two companies (A group registration).
If you haven't already, I would ask the director about it, before considering other options. I notice you said you presume he wants you to reclaim the VAT. It may be just possible he didn't know he couldn't do it (unlikey I would have thought but you never know)
As it is a new separate company, have you done the normal MLR due diligence checks? I am sure you would need to even if it is the same director, as there may be other directors involved etc.
The reason I ask is that there is also the higher risk of money laundering, with funds swapping between two companies with the same director. If he insists you claim the VAT illegally, you are immediately placed in an awkward position, with regard to VAT fraud and money laundering because you already have a suspicion, which in it self is reason enough to make a report.
It's a bit doom and gloom for a lovely, sunny Sunday but like I said at the beginning, the first thing to do is check with the director.
Just to add an edit. The bottom line is make sure you protect yourself
Bill
-- Edited by Wella on Sunday 7th of March 2010 02:04:15 PM
Is it a VAT dodge????? eg:- will he get a VAT refund on company 1 each quarter and then company 2 is not VAT reg so all the other stuff goes through it so to make sure company 1 gets VAT refund.
I'm not saying it is but if it is the HMRC don't like companies being split in two to avoid VAT being paid each quarter and may at a later date lead to an investigation.
Putting that to one side it may be totally legite.
Also he shouldn't be tampering with receipts that have the incorrect name on them. I do agree with Bill on this.
Definately check it out if only for your own piece of mind that you have done everything correctly.
You can only put VAT through if the VAT invoice is addressed to the company. If directors or employees use their own cr/dr cards and put these in as expenses, even if the VAT receipt is attached you cannot reclaim the VAT.
I have exactly this same problem. Ive explaned to the Director that unless the receipts are in the specific name then I cannot claim VAT. He pays for goods from one company bank account for invoices made out for the other. I put these through the intercompany loan account & reconcile this also monthly. If the receipt/invoice is in the crrect name then I will journal it back out. Its his money, but, I stick to I know what is right, its up to his accountant how he wants to treat the intercompany loan account as well as theyre both different year ends.
