Client does not want to pay back dated VAT invoice

[Pondlife]

Maybe, since the OP hasn't stated, this client may not be VAT registered themselves - Not all our clients are Big Corps.

Since there was most likely no mention of VAT being charged when the work was done, the client hasn't factored this into their finances and wasn't expecting a bill 2 years on.


Another thing is that the OP (according to previous posts) was working in some sort of Self employed/Ltd hybrid type affair and has recently changed accountants. No wonder it's a mess.

[Gulliver]

Normally having vat only invoices paid causes no issues; I wonder if there is something else behind the scenes here, eg a bad relationship with customer?

Its unusual to go back that far with a voluntary registration.

I think pass this back to your accountant to unwind - they pushed you out there, they can bring you back in.

I'm definitely passing this back to my accountant. When I asked them yesterday if it was possible to cancel the back dating they said it wasn't. Don't think there is a bad relationship with the client. Simply, they are a small company with 2 employees and a contractor. If I was in his situation I would not pay it either if I have got the choice.

[Gulliver]

Maybe, since the OP hasn't stated, this client may not be VAT registered themselves - Not all our clients are Big Corps.

Since there was most likely no mention of VAT being charged when the work was done, the client hasn't factored this into their finances and wasn't expecting a bill 2 years on.


Another thing is that the OP (according to previous posts) was working in some sort of Self employed/Ltd hybrid type affair and has recently changed accountants. No wonder it's a mess.

To the client it's a bill 4 months on. This issue has nothing to do with me being self employed. That business is being closed at the moment. Accounts are prepared.

[psychocandy]

So when is the invoice for? 4 months ago or 2011?

To be fair, I can see why client is objecting if it was 2011. Also, surely as others say, you have to at least put on the invoice vat reg pending?

For a clients that not vat registered surely it means you're giving them an invoice for an additional 20% that they are not expecting. I wouldn't pay either!

[SueEllen]

To the client it's a bill 4 months on. This issue has nothing to do with me being self employed. That business is being closed at the moment. Accounts are prepared.

I actually agree with the client in this case.

Unless you clearly put "VAT registration pending" or similar on your invoice I wouldn't pay it especially if I had no current working relationship with you.

[Gulliver]

I actually agree with the client in this case.

Unless you clearly put "VAT registration pending" or similar on your invoice I wouldn't pay it especially if I had no current working relationship with you.

Agreed. I absolutely agree with the client too. It's just that I need to pay that VAT. My accountant is blame. They have not advised me about any risks about back dating my VAT. They just said it will be all right, companies with VAT should not have a problem paying back dated VAT invoices.

Currently disputing this with the accountant.

[Gulliver]

So when is the invoice for? 4 months ago or 2011?

To be fair, I can see why client is objecting if it was 2011. Also, surely as others say, you have to at least put on the invoice vat reg pending?

For a clients that not vat registered surely it means you're giving them an invoice for an additional 20% that they are not expecting. I wouldn't pay either!

Invoice is for Nov 2012. At that time I was not yet even thinking of VAT registration. I was at another accountant. Absolutely agree with you and would do the same in the client's situation. Only chased them because I need to pay that VAT. IMHO Accountant is blame.

[SueEllen]

Invoice is for Nov 2012. At that time I was not yet even thinking of VAT registration. I was at another accountant. Absolutely agree with you and would do the same in the client's situation. Only chased them because I need to pay that VAT. IMHO Accountant is blame.

While on here people say ask your accountant I would advise you to do your own research instead of blindly agreeing to everything.

Thanks to google you can search and see if there are any potential problems with what your accountant suggests you should do as other business and accountancy forums/sites come up as well as this one. Just make sure it's a UK site.

Also mention to any other contractors you know who have been doing it for years if you have an issue. Some people will be full of tulip while others will point you to a resource whether that be another contractor, website or accountant that can help you.

[mudskipper]

In most cases there wouldn't be a problem.

Most accountants come with a disclaimer that ultimately it's YOUR responsibility as a company director to check the accuracy etc.

I think it's unfortunate, but I don't think you can blame the accountant for bad advice. Common sense tells you if you invoice someone for something they don't legally have to pay, they may not pay it. The 'well it won't cost them anything' argument means that most will pay (which is what your accountant said), but if it's major hassle for them, or going to cost them, why should they?

[Contreras]

My accountant suggested me to sign up for flat-scheme VAT. She recommended to back date it as I can "earn" some extra cash. She told me that most companies have no problem with paying the VAT on a back dated an invoice. So I went ahead.

All of my clients are happy to pay the VAT backwards except one. A smaller company. 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.

My accountant tells me that I can either swallow the loss which is quite substantial for me £1.6K. Or pursue it through small claims court.

When I enquired HMRC about back dated VAT invoices they said that my client is not required to pay the VAT on a back dated invoice and so it's between my and my client.

I think you have cause for complaint with your accountant here - As you discovered, the client is not legally obliged to pay back dated VAT although your accountant continues to advise otherwise.

I would check that HMRC have also backdated the FRS registration, don't just assume so.

If FRS has been backdated to 2011, then of course you profit by being on the scheme and it would need £60k worth of sales (net) in that period to profit by £1.6k. If that is the case then just consider yourself lucky that only one client has refused to pay.

If no VAT returns have been submitted yet, and you would be worse off, then you could speak to HMRC and see if you can revise the date of registration - although that gets messy if you have now billed clients for VAT.