What is the definition of a payment
By Marc Sevitz · Updated
A payment to whom or in what context?
I have a client that pays indirect tax on the payment basis. He runs company A and owes money to company B. In return company B owes money to company A.
So my Client Company A took the taxable money they are owed by Company B and played it off against the taxable money company B owes them.
My client has a valid tax invoice.
Does this constitute a payment, because it would have not been practical for Company A to pay company B and Company B then take the money and pay I back into company A bank account.
If it is seen as a payment I will be able to argue the tax is claimable, because its not a financial service due to no debtors accounts being taken over
So my Client Company A took the taxable money they are owed by Company B and played it off against the taxable money company B owes them.
My client has a valid tax invoice.
Does this constitute a payment, because it would have not been practical for Company A to pay company B and Company B then take the money and pay I back into company A bank account.
If it is seen as a payment I will be able to argue the tax is claimable, because its not a financial service due to no debtors accounts being taken over
If services are rendered or goods supplied from one company to another, assuming both are VAT vendors, then regardless of how the payments are made (in this case it is just a netting off) there is still a supply of goods or services and a payment for that supply which triggers a VAT event so yes this amount should be claimable as a VAT input.