Separate, but associated, businesses frequently share overheads although the costs are initially borne by one business. In such circumstances, it is common practice to subsequently distribute the costs between the associated businesses by means of ‘management charges’ or ‘service charges’. A group of companies may use ‘management charges’ to move profits or losses from one group member to the another for corporation tax purposes. Such arrangements normally create a taxable supply.

Want to read more?

This content requires a Croner-i Tax and Accounting subscription.

No subscription?

Contact us to discuss your requirements.