1. Manually add the VAT for both companies together and send one VAT Return (from Company 1) to Customs and Excise.
2. In Company 1 set up a new nominal in the Liabilities Group called Inter-Company VAT
3. Put a VAT RCT into KEY for Company 1 for the amount CLAIMED BY COMPANY 1.
4. The difference (owed to Company 2) should be entered as a Bank Receipt with Company 2 name as the trader and posted to the Inter-Company VAT nominal(2015 in our example)
5. Repay the outstanding amount to Company 2 using a Bank Payment with Company 2 as the trader and post to Inter-company VAT nominal.
6. This reduces the liability to zero for Company 1.
7. In Company 2 (NOT submitting the Return) confirm the VAT Return in KEY Accounts to create the VAT Invoice.
8. When the money is received from Company 1 enter as a VAT Receipt from Customs and Excise.