Company A is VAT registered and their Bank account has been used to pay items for Company B (which is not VAT registered and is short of cash). Both have common ownership.
The previous book-keeper has put some invoices and payments through Company A - allocating them to the usual nominal codes (eg fixed assets/travel expenses/stationery - dependent on what was bought and claiming VAT back through Company A. He started a list to the accumulation of such expenses, but it appears nothing has yet been put through to show the inter-company position on the Sage software.
Ive keyed a few more such invoices/payments, but have used the Sundry Debtors nominal code for Company B(in Company A's sage) so they straight away reflect that money is owed by Company B to A. BUT - this then only shows the net and doesnt show the VAT side. Ive also added to the spreadsheet but not yet keyed the inter company on the Sage software for Company B. Am now also concerned that the expenses for company B are not being shown in their correct allocations.
Should I key it the way the first book-keeper did, keep the spreadsheet then do a journal say once a month?
Or should I do it a completely different way - am confused!!!!!!!!!!! JUST cannot seem to get my head around this one despite pondering all day on it!
__________________
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
For those items posted by the previous BK - Company A would chargeback the costs to Company B, adding VAT so that the amount paid by Company B to Company A is the original gross figure. You can then do a journal from net sales to the net expenses codes to cancel all those charges out, or you can leave the sales where they are - as long as the net effect is NIL.
If B will not pay A, you will have to use a dummy bank account to pay off the sales invoice and then move this balance (CR BANK, DR Sundry Debtor)
POSTING IN COMPANY B
Post the sales invoices created in A as a purchase invoice in B. If B will not pay A, use a dummy bank account again, and clear this credit balance to a sundry creditor code.
Now, when you post items through Company A, that belong to Company B, you post as T9 to the sundry debtor code.
Company A cannot claim Company B's VAT
When you post company A's sales invoice, as a purchase invoice in B, there will be no VAT of course. This will be a T9 BP to a sundry creditor code.
-- Edited by FoxAccountancyServices on Friday 8th of November 2013 08:49:47 AM
PS - if you decide you don't want to show the recharge as sales in company A, depending on what Sage version you have, you might be able do this...
First check if you can process supplier refunds! I am sure there are version of Sage that cant.
If you can -
Create a supplier for Company B Create credit notes for all the items posted by previous BK, posting to original codes (This will reduce purchase VAT instead of increasing sales VAT)
Refund the supplier account with a dummy bank account. This will create a DR to the bank, which you can move to the debtor sundry code
The above is how I do things when I dont want to affect my sales VAT, if its something that is actually related to overclaim of purchase VAT.
Hi Michelle
Fortunately I have Sage Professional on this company so supplier refunds are easy enough to do. Thank you for your full breakdown as ever!!
Its a right old mess and a wonder anyone really knows what belongs to which company.
There are an absolute MASS of purchase receipts and invoices that relate to Company B which have been paid for through Company A (so they can claim the VAT back and because of cash flow difficulties). Ive put the latest ones through Company A, just using the Sundry Debtors nominal code and have a spreadsheet listing the latest items, but have not yet put anything through Company B (lack of time!!). what a headache!
Thanks again
__________________
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
