A number of issues have caught my attention over the last few months relating to where VAT should be charged.

1. Intercompany charges: Where management charges are levied between businesses – these generally should be VATable where the seller is VAT registered. Sometime where the seller is exempt or not registered – the addition of a taxable supply like management charges can mean that they should be registered – care needs to be taken.

2. Disbursements – the general rule is that where expenses are recharged to customers – irrespective of whether the original cost incurred VAT (such as travel) the recharge should carry VAT. There are exceptions - but that is the basic rule.

3. Recharging employment costs – likewise, generally if recharges of salaries etc are made – VAT should be charged. Again, there are many exceptions but this is the general rule.

4. In 2010 the rules will be changing in relation to some services sold and purchased within the EU and the regulations as to how VAT should be charged will be amended. If you do buy and sell services now is the time to consider whether the changes will have an impact on your business and you should consider the impact of these changes now.

VAT was meant to be an easy to understand tax – it is probably the most complicated of all the taxes when it comes to dealing with everyday matters and very often the common sense answer is far from the legal requirement. Always ask a question when something out of the ordinary occurs – never assume. I am of course happy to answer your questions.