Ive just started to look after three restaurants, 2 of which are based close together in Manchester. They are run through separate limited companies and mostly keep all the paperwork separate, apart from:-
The staff are paid under separate payrolls for each company dependent on the restaurant they work for (hourly paid/part timers). On occasions the staff may have to work at the other 'branch' due to staff shortages etc.
The Director is looking to apportion the cost out to the company that it relates to.
Suggestions are:-
1) Re-charge via invoice - effectively a recharge of costs between the 2.
Or
2) Process the wages journals wholly through the initial company, but then make an adjustment to remove some of the cost via a journal crediting gross wages and debiting an inter company loan account in the balance sheet/making adjustments in the other companies as well and make sure it all agrees.
I prefer option one personally, BUT - would I have to charge VAT on the invoice?? (Both companies are VAT registered)
Thanks in advance (and to Jeremy and Paul who have helped already!)
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I took another look at this and found the following -
"VAT is payable on management fees charged by one business to another to recover the cost of staff who are jointly employed by both businesses. VAT can be avoided on the charge by registering as a group, or by having a contract which says that the charge is for reimbursement of employment costs, not a management charge."
So I would suggest that VAT is charged, As both are VAT registered the net effect will be nil as one will have to pay over the VAT and the other will claim it back.
Hope that helps
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Hi Jeremy
Thank you - it does. Im going to look into the Group VAT situation first I think as that might solve some other lurking issues too. Thank you for looking again for me too - much appreciated. First wages day for me with this customer tomorrow so Im hoping not to find any other howlers!
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
