VAT on Intercompany Recharges

Hi, We have a group of companies and one company has paid for a Drivers Theory Test on behalf of another company within our group, which we need to recharge to the correct company. Would I charge VAT on the invoice to the inter-company? Thank you

Hi,

If you are making recharges then you would normally be required to charge VAT on this. However, please see the disbursements rules below:

Supplies made by or through agents: other situations

Thank you.

Thank you. What about vehicle tax, so if Company A has paid for vehicle tax for a vehicle which belongs to company B, would this be VATable when an invoice is raised to company B? Thank you

The companies may be in a corporate group but VAT purposes, you have to treat as if they are individual companies and nothing to do with each other. So driver theory tests, MOT fees and similar costs incurred in Company A and recharged to Company B are recharged plus VAT. Both the driver test and MOT will not have any input tax charged on them as these supplies are from statutory bodies and their fees are not subject to VAT, but only when they supply to you the customer, when you recharge those costs onto someone else, whether an employee or an associated company, you add VAT. Same with train or airline tickets, zero rated when you buy them from the train or airline company, but if you are recharging these onto someone else, you add VAT.

Hi,

If you provide goods and services in the UK then these are generally taxable. However, if you are merely acting as an agent and paying for a supply on behalf of another company then it may be a disbursement. You can see the guidance below:

Supplies made by or through agents: other situations

Thank you.

hello, we are 2 companies in a corporate group. Our company (A) has paid for uniforms (VAT was charged). I provided company (B) with some uniforms, I need to recharge company (B) within same corporate group and I am not sure if I should charge them VAT too? Thanks your reply is much appreciated.

Hi,

There would need to be VAT charged for supplies or recharges between companies of a corporate group.

However, if the companies belong to a VAT group where the VAT number is shared by the group members, then  VAT would not normally be charged for these recharges.

Group and divisional registration (VAT Notice 700/2)

Thank you.

Hi, Our UK company (VAT registered) purchased a laptop (VAT charged) on behalf of another group company in Japan. On the recharge invoice. Can the UK company relclaim the input VAT, and should it recharge the net or gross value to the Japanese entity? Thanks in advance

Hi,

You are able to recover the VAT as input tax if the laptop was purchased in the course of your business. You can see guidance here:

VAT guide (VAT Notice 700)

Please can you confirm if you then sell on the laptop to the other company in Japan and if so is it exported out of the UK?

Thank you.

Hi - similar question to above: Our UK company (VAT registered) paid for a taxi fare on behalf of another group company in Japan. On the recharge invoice. Can the UK company reclaim the input VAT, and should it recharge the net or gross value to the Japanese entity? Thank you

Hi,
If you make a recharge only, then this would normally be chargeable to VAT unless it meets the conditions of a disbursement. You can see the information here:
Supplies made by or through agents: other situations
You can see the rules on input tax here:
Introduction to input tax
Thank you.

Hello, We have two UK companies. Company 1 pays the salary and expenses of one member of staff and needs to re charge these costs to company 2. Firstly is company 1 able to reclaim input VAT on the expense for this member of staff ? Secondly do we need to add VAT onto the invoice to company 2 for both salary and expenses or expense only for the value that we have reclaimed in input VAT?

Hi SarahM2025,
For employee expenses please refer to: VIT13400 - VAT Input Tax basics: when input tax can be claimed by the business on supplies to employees
If this is a supply for staff please read: Supply of staff and staff bureaux (VAT Notice 700/34).
Thank you.