AI generated ## Summary In the UK, VAT usually does not apply to internal charges within the same organization. However, it can apply in certain situations, such as between separate legal entities or in shared services arrangements. ==Organizations that are partially exempt may also have different VAT recovery rules for internal transfers.== ## Highlights - VAT generally does not apply to internal charges within the same legal entity ([View Highlight](https://read.readwise.io/read/01jmhbvpw3vhmbhf1ekgc7ee1f)) - ==VAT is only chargeable on supplies of goods or services made by a taxable person to another separate legal entity in the course of business==. ([View Highlight](https://read.readwise.io/read/01jmhbvjjm3qp6g2xxzea3vdns)) - VAT may apply in the following scenarios: ([View Highlight](https://read.readwise.io/read/01jmhbx7k35egd56ywxtmb6gmk)) - Partially Exempt Businesses – If an organization is partially exempt (e.g., a charity or financial services provider), ==internal recharges may affect VAT recovery calculations==. ([View Highlight](https://read.readwise.io/read/01jmhbwkt3gh5drt9rvxsrfv02)) - Disbursements and Recharge of Costs – If costs are being recharged between departments or entities, ==VAT treatment depends on whether the original costs were subject to VAT and whether the recharge is considered a supply for VAT purposes==. ([View Highlight](https://read.readwise.io/read/01jmhbwrw2hhs876jv91prk157)) - Shared Services Arrangements – If services are shared across departments or group entities, VAT may apply if the arrangement is considered a taxable supply. ([View Highlight](https://read.readwise.io/read/01jmhbwzqb5a6xe214r7mw7sqy))