VAT charged on invoice by not paid by Agency

[WordIsBond]

Yes, I am presuming that. It's based on the assumption that OP / wife would have noticed earlier if agency had said, "We aren't paying VAT because we don't have a VAT certificate." I suppose I'm taking OP at face value that they had no reason to know that VAT was an issue.

But this isn't demanding money "out of the blue." They've already been invoiced, and the contract will be clear that VAT is included. That invoice IS a demand, and it is presumably fully in keeping with contractual provisions. If someone is a year late, a "pay up now" demand is fully appropriate.

Nevertheless, as you've said, if the VAT certificate hasn't been provided, especially if the agency has notified them that the VAT is in dispute because of that, then yes, appropriate time must be granted. I'd still say the agency's case would be pretty weak if they've never communicated anything about disputing an amount on the invoice. It's not ok to just pay part of an invoice and never say anything about why you aren't paying the rest, and if that's what has happened here, the courts would also say that is unreasonable.

Bottom line: Your approach was based on the assumption that the agency did not have the necessary VAT proof and so their failure to pay is legitimate. My response was based on the opposite assumption, and so their failure to pay is intentional neglect. The proper response (as far as how much time to allow) is based on whichever assumption is correct.

Though I'd say the agency is still significantly in the wrong here, even if your assumption is correct, if they never communicated about the issue (and in which case I wouldn't be overly patient with them). If they did communicate about it, of course, then OP and his wife have messed up and are going to have to make full allowances, but still should be able to get their money.

[Contreras]

You don't need to give warning of interest charges as it's a statutory right. I can't imagine how a judge could take it any other way.

With the VAT Reg Number clearly printed on the invoices, which the agency can check online for themselves, no further 'proof' should be necessary. Again, being statutory, I can't see a judge taking an alternative view.

So IMHO you could go straight in with guns blazing immediately. But...

Why waste the energy when, for the sake of an extra week delay, a subtle email or two may produce the desired result? Unless you suspect cash flow problems at the agency.

If the response is well we need to see the VAT certificate, then just do it. Save the argument that this proves nothing for another day.

If the response is can't pay/won't pay, then don't wait the 7 days just follow though with a demand by registered post immediately. In this case the only reason for not invoicing the interest immediately would be being too busy to work it out properly. Even after invoicing for interest it's still at your discretion to waive it, say if the debt was settled promptly.

On the matter of calculating interest, as I understand it, it will depend on how the part-payments of invoices have been made. If the payments reference individual invoices then you have a series of debts, each being the VAT portion of that invoice. If the payments make no reference to specific invoices then the 2nd payment will cover the missing VAT from the 1st invoice and so on.

Another option, if the agency get arsey, is to simply hand it over to a debt agency - assuming they would take it, but there can be little argument that the money is owed in this case I would have thought.

[jimmyharris80]

Hi All - Thanks for the comments.

We've completed a complete review of all email correspondence with the agency and there have been no issues raised by them with regard to not paying the full invoice amount and the VAT at any point during the assignment, it's just been withheld at point of payment.

Looking at all the documentation sent to them it appears she hasn't provided a VAT certificate, this could potentially be the reason for withheld payment although I would have expected a query from them once the first invoice was received outlining VAT due and the company VAT number. As other posters have mentioned, plugging the VAT number in online is an easy way to verify.

Our plan is to contact the agency/payroll dept directly via email in the first instance to request payment. If this doesn't yield a positive result we'll issue a demand via registered post with 30 days notice and take the debt collection route.

[Fred Bloggs]

Sounds to me like they have assumed you were not VAT registered for some reason. And because you didn't pick up on it, that is the way it stayed. I doubt there will be any hassle getting the agency to pay the VAT due. But the sooner you get on top of it the better.

[jimmyharris80]

By means of an update....

Email sent to payroll department outlining monies due and a copy of all invoices. Apparenty VAT withheld as they didn't have a copy of the VAT Certificate. Would have been nice if they'd raised that with her at the time instead of withholding it on 20 weekly invoices with no notification.

Full VAT amount will be paid in this weeks pay run.

Lesson learned, always check the company bank account and rec back to invoices.

Thanks all for the helpful advice and input.

[TheCyclingProgrammer]

Good result, but they should count themselves lucky you aren't slapping on statutory interest.

Since when was "not seen the VAT certificate" justification for not paying an invoice in full? They could have verified the VAT number themselves.

[dx4100]

Lesson learned, always check the company bank account and rec back to invoices.

I am just utterly gob smacked you wasn't doing this anyway....

[Old Greg]

I am just utterly gob smacked you wasn't doing this anyway....

Well it's only 10 months...

IIRC there was someone trying to go back several years for expenses they hadn't claimed some time ago.

[WordIsBond]

I am just utterly gob smacked you wasn't doing this anyway....

I got double-paid on an invoice and it took more than three months to catch it. I'm busy. I knew payments should come in, payments came in, I didn't verify amounts every month. Several contracts running, everybody was paying, of course they were paying the right amount. Dumb. At least we discovered it before the end of the contract so I could just show it as a credit on a later invoice.

My wife checks them all now.