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Where Taxpayers and Advisers Meet

Company assigned all revenue to third party

shiraegi
Posts:2
Joined:Fri Jan 28, 2022 9:53 pm
Company assigned all revenue to third party

Postby shiraegi » Fri Jan 28, 2022 10:10 pm

Company A has a contract with Company B.

At the same time, Company A has an agreement with Company B and a third party Company C that all revenue from Company B due to Company A under that contract has been assigned to Company C.

If Company B asks for an invoice from Company A to make payments, but all revenue goes directly to a collection account for disbursement to Company C, is it fine/correct to report no income for Company A? (Company A never sees any money)

Alternatively, is Company B obliged to pay if Company C invoices Company B instead of Company A invoicing Company B, given Company A's assignment of revenue from Company B to Company C?

wamstax
Posts:2019
Joined:Wed Aug 06, 2008 3:39 pm
Location:Operate Nationally but based in Aberdeen
Contact:

Re: Company assigned all revenue to third party

Postby wamstax » Sat Jan 29, 2022 8:03 pm

If I was company B I wouldn’t pay anybody except company A who I have a contract with.
regards and hope this helps
http://www.wamstaxltd.com
Operates Nationally with competitive costs
and email and phone contact (mob 07751720507) can be obtained from websites

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Company assigned all revenue to third party

Postby bd6759 » Sat Jan 29, 2022 11:12 pm

If I was company B I wouldn’t pay anybody except company A who I have a contract with.
You missed the agreement between A and B to pay C.

A contracts B.

A invoices B for payment.

B pays C.

Company A declares the income because it was entitled to the payment, presumably for providing a service to B

Company C has presumably already provided a service a A and will declare that income.

shiraegi
Posts:2
Joined:Fri Jan 28, 2022 9:53 pm

Re: Company assigned all revenue to third party

Postby shiraegi » Sun Jan 30, 2022 1:36 am

Thanks much bd6759.

Actually Company A took a loan from Company C, then it licensed a product to Company B, and in an assignment agreement between Company A, B and C, Company A assigned all royalties from that license to Company C until the loan is repaid.

If Company A invoices for the royalties, does it still need to declare the income if it has all been assigned to Company C (who will definitely declare the income)?

If Company A declares the income and a matching expense (zero profit) does the abovementioned assignment agreement suffice as backup for the expense, without an invoice from Company C? Because the royalties just go from Company B to a collection account from where they are distributed to Company C and there are no invoices issued by the collection account or Company C in this process.

As well, should Company B accept invoices from Company C as well based on the assignment agreement, instead of from Company A?


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