VAT issue after changing companies

[greene]

Hi

Due to financial/directorship irregularities with my old limited company (X) which I have discussed in another thread, I created a new company (Y) with just a single director, myself, in September of last year.

The work I currently perform is delivered to a medium-sized UK IT services company, but my contract is always with an intermediate payroll company, who use a self-billing mechanism to facilitate the payment of invoices and issuing of remittances. Payment terms are 30 days.

In September I arranged a new contract with the payroll company to reflect the fact that I would now be providing my services through Y.

Before Christmas I looked through the automated remittances as part of the quarterly VAT adminstration, and I noticed that a remittance dated 30/9/17 made out to Y was actually for services performed by X in the month of August 2017. VAT has not been charged, because Y (obviously) was not VAT-registered for that August period of work. (The payroll company added a comment to that effect.)

Initially, my accountant thought that I could simply bill the work back to X. But the accountant now says that this is not possible as the automated remittance is made out to Y.

I have raised this with the end customer (IT services company), but they are not interested as my contract has never been with them and referred me back to the payroll company. Said payroll company were replace in November 2016 by another, and are not responding to my query.

In a perfect world I would have spotted this earlier, but it is what it is.

I wrote to HMRC to explain the matter about a week ago, but have not heard anything back.

I would appreciate any thoughts and observations on how this issue might get resolved, lest I fail to make progess with the three parties concerned.

Thanks in advance,
greene

[radish2008]

I would call HMRC and pay the VAT - then sort out the accountancy details with your accountant. But pay the missing VAT first of all, you can phone them and pay it over the phone, then merge it into your next return.

Actually I think you can pay it without fessing up to your mistake if it's a small amount.

[greene]

I would call HMRC and pay the VAT - then sort out the accountancy details with your accountant. But pay the missing VAT first of all, you can phone them and pay it over the phone, then merge it into your next return.

Actually I think you can pay it without fessing up to your mistake if it's a small amount.

Ok thanks - it's about 1300 GBP so not a trivial amount, but if ultimately it's that the only way to resolve it then I will take it on the chin as my own mistake.

[radish2008]

I had a similar issue with Free Agent =- forgot to upload the bank details and then missed a VATable payment on the last day of the VAT period. I added it to the next submission without telling HMRC and apparently it's fine.

Was a smaller amount but as yours seems to be a genuine mistake I'd ask my accountant and then avoid calling HMRC actually if I could. Either way I think you'll be fine.

[northernladyuk]

Pay HMRC the VAT. Raise a VAT only invoice with the payroll company. Call Safe Collections if they do not pay.

Run that past your accountant first.

[greene]

Pay HMRC the VAT. Raise a VAT only invoice with the payroll company. Call Safe Collections if they do not pay.

Run that past your accountant first.

Hi there

Belated thanks for the advice.

I did run this past the accountant, and also contacted HMRC for a view.

HMRC said that, ultimately, the end customer (my end client) is responsible for any anomalies with payroll and, legally, the payroll company aren't responsible. My end customer is somewhat sympathetic but reluctant to either process or pay anything as they say they have already paid the VAT as part of a larger arrangement with the payroll company.

My accountant wants to see an invoice/remittance with the VAT on it, as this is what they will submit with the VAT return. Needless to say, they are very keen to do everything by the book. (They are a large accountancy firm who provide services to contractors.)

As already stated, I just want this properly accounted for, even if I have to foot the bill ultimately.

Any thoughts on whom I should be pressing? The accountant, for not being flexible?

Thanks in advance
greene