Client does not want to pay back dated VAT invoice

[BolshieBastard]

Just to remind people, only one side of the argument is being presented here. Statements like 'my accountant said it would be alright' isnt the full story.

I think the OP may need to discuss this further with his accountant but talk of going to the small claims court over a couple of hundred quid for backdated VAT? Come on.

In any event if there is a shortfall with backdated claimable VAT, what does the VAT office say exactly about this? has the oP contacted hmrc and asked them directly what his options are? Can this be classed as a bad debt and written off by hmrc?

In any event, if the OP has registered for the FRS, even if this back VAT isnt paid by the single client, it just means in the first year of registration he'll claim a couple of hundred quid less than he would have done ie the 'profit' he gets from the FRS will be slightly less than it would have been.

[Wanderer]

They say they can't do it because of cash flow. I asked them if they could do it just before their VAT return date so that they would not have problem with cash flow. They refused.

So they accept that they have to pay it but they refuse to do so.

Cash flow problems is not an excuse for not paying. Don't mess about, take it through the standard dunning procedure and on to the small claims court if required.

[mudskipper]

Is your client VAT registered?

If they are not registered, or themselves are on the FRS, then your VAT invoice will cost them.

[Jessica@WhiteFieldTax]

Something occurred to me earlier. Do you have a contract with the customer, and if so what does it say about VAT? It may well specify a price or rate "ex vat" or "subject to vat if applicable" - that may strengthen your hand.

[Gulliver]

Something occurred to me earlier. Do you have a contract with the customer, and if so what does it say about VAT? It may well specify a price or rate "ex vat" or "subject to vat if applicable" - that may strengthen your hand.

That was a good idea but unfortunately the contract does not state anything about VAT. Simply says "at a rate of ..." payable weekly in arrears. Checked other parts of the contract as well and haven't found anything regarding VAT.

[Gulliver]

Is your client VAT registered?

If they are not registered, or themselves are on the FRS, then your VAT invoice will cost them.

They are VAT registered.

[Gulliver]

Just to remind people, only one side of the argument is being presented here. Statements like 'my accountant said it would be alright' isnt the full story.

I think the OP may need to discuss this further with his accountant but talk of going to the small claims court over a couple of hundred quid for backdated VAT? Come on.

In any event if there is a shortfall with backdated claimable VAT, what does the VAT office say exactly about this? has the oP contacted hmrc and asked them directly what his options are? Can this be classed as a bad debt and written off by hmrc?

In any event, if the OP has registered for the FRS, even if this back VAT isnt paid by the single client, it just means in the first year of registration he'll claim a couple of hundred quid less than he would have done ie the 'profit' he gets from the FRS will be slightly less than it would have been.

Not just a couple of hundred quids! 1.6K. Contacted HMRC who said that my client is not required to pay the back dated VAT and the issue is between me and the client.

[Gulliver]

So they accept that they have to pay it but they refuse to do so.

Cash flow problems is not an excuse for not paying. Don't mess about, take it through the standard dunning procedure and on to the small claims court if required.

No, they said they asked HMRC who confirmed they are not required to pay it. I talked to HMRC and confirmed this is true. Can't go to small claims court if even HMRC says I have no case!

[Wanderer]

No, they said they asked HMRC who confirmed they are not required to pay it. I talked to HMRC and confirmed this is true. Can't go to small claims court if even HMRC says I have no case!

Ahh, that sucks.

What would happen if you just didn't apply VAT to that invoice then? I guess HMRC could investigate you at some time in the future and find the "mistake". I can't see why HMRC should make a profit out of your loss.

[BolshieBastard]

Not just a couple of hundred quids! 1.6K. Contacted HMRC who said that my client is not required to pay the back dated VAT and the issue is between me and the client.

If hmrc confirm the client isnt compelled to pay the money then suing your accountant is your only option imo.

Getting debt collectors or going to the SCC will be a waste of time and money since it has been confirmed there's no compunction to pay. A debt collector may take the case on to get money off you but they'll have the same difficulty you have ie not compelled to pay.

Similarly, the SCC once learning there's no compunction to pay will be unlikely to rule in your favour (imo).

You'd also have to prove your accountant has never said the onus is on you to check all facts and have mislead you or been negligent regarding the pros and cons of retrospective VAT registration.

I'd suggest trying to discuss it professionally ie no ranting and raving, with your accountant and see where you get.

In all honestly, I think you have little chance of getting redress and may have to take the hit. Just my opinion though.