I have a question regarding the treatment of VAT within a company on sales. We have 5 companies within a few miles of each other and within one company we have a café and restaurant where staff can purchase meals the same as the public.
My scenario -
If I bought a sandwich at the café and ask them to recharge it to my cost code how would the VAT be accounted for:
The current process is that VAT at the point of sale through the till as 20% sales tax then the finance staff process the internal recharge as a journal to the relevant company/department with 20% purchases on it, thus cancelling out any VAT across the group.
Is this the correct way to treat this? The sales can be within the same company or between 2 different companies. The Group is all under the same VAT code.
If the sale is within the same company, there is no output tax nor input tax. If output tax IS accounted for with the till system, you will need to make an output tax adjustment to reverse the entry.
If the sale is to a different company, then it is treated as a normal sale; and the purchaser claims input tax in the same way as from a third party supplier.
