I have a client that has two companies, the main company is for the retail side of the business whist the other company sells franchises in the business. Occsionally some expenses relating to the franchise business are paid by the main company and are subsequently charged back to the franchise business by way of an inter- company loan. My question is in respect of input VAT for these expenses, - is it OK to claim these through the main company? (the invoices are addressed to the main company or are just till receipts).
VAT should not be claimed by the 'wrong' company. The rules for claiming input tax insist that only the company receiving the supply can recover the VAT. By all means pay through one company, and make an inter-company adjustment, but do be careful where the VAT is claimed.
