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My client has just had a VAT audit and HMRC have queried 2 invoices.
Client is a holding company and is VAT registered. Its two subsidiaries are in business but making exempt supplies. It provides VATable management services to them
The two which are queried are shareholder agreements and financing documentation on the purchase of leaseholds, to be held in the subsidiaries
I would tend to argue that the first is allowable (an acquisition of a company to which taxable supplies are made) but the second perhaps not, because it relates more closely to an exempt supply ie the letting of properties by the subsidiaries.
Any thought appreciated.
VAT is charged to the person (not business) ie self employed, company etc. That means your company and your self-employed status are treated differently as long as there is no linked activities.
VAT is compulsory if you exceed the threshold (over 12 months period) or at anytime your sales in the next 30 days exceed the threshold. It appears you will be caught by the later. However since you are not expecting to be paid why not invoice when you know you will be paid. Alternatively you can join the cash accounting system where you only account for VAT when the invoice is paid.
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