Paid too much!

[oraclesmith]

Hmmmm....
That's where it gets interesting! Sure, the agency will view it as VAT, but as far as his company is concerned it has received and paid out all of the VAT due on it's invoices. This is 'extra money' that appeared in his company's account....

It's a big risk. If your mate keeps the money in his company and claims he didn't know it was VAT, he's got to back that up with something. Firms don't just pay out money without a paper trail leading back to an invoice.

If he knows (or could reasonably suspect) that it's VAT, then he must notify the firm or the VAT asap.

If he keeps quiet, he is going to get into serious bother when the VAT inspector comes round as he cannot justify his actions. It's not enough to say "wow look the agency fairy left me some extra money, I think I'll keep it !" He could submit it on his next VAT return with an explanatory note and let the VAT people sort it out.

Your 'friend' does NOT want to VAT people to start smelling a rat !!!! Any errors are taken very seriously and they will start suspecting your mate is running a dodgy operation ---Like a cash in hand builder or plumber.

[ratewhore]

[Asterix]

Not a crime

It should be left in the account it was credited. It's not a crime as there is no fraudulent trail, just a simple error like an agency overpaying a contractor. If the money stays in the account and they don't ask for it back, it's legally yours. If the money is taken out, spent or transferred out and they ask for it, then it's got to be repaid (without interest). Same thing as if a cashpoint gives you extra money. Not obliged to hand it back, unless you are asked to AND there is a trail that leads them to your account/card.

[oraclesmith]

I don't think the VAT will look at it like that. The agency will probably have overclaimed the input tax that they paid to the contractor, and the contractor will have UNDERPAID the output VAT that they collected, regardless of whether or not it was correctly calculated in the first place.

The overpayment that sits in the bank account of our contractor's firm is therefore actually and materially due to be repaid to HMRC as they paid it out via a claim for input VAT. It may be the agencies fault that it happened, but the agency have effectively taken a few thousand from the HMRC and given it direct to our contractor's company !!!

The agency won't have suffered a loss due to their error, but the HMRC will have done, and it will be your mates fault if he keeps the money and doesn't report it.

It could easily be construed as fraud if the VAT people think that the agency and the contractors firm are colluding......

The only defense is ignorance and that won't hold water when the overpayment runs into thousands.

In my opinion.

[deforce]

Thanks for the replies, I'll let my friend know his options.......

[MarillionFan]

Options

1) Bend down in the shower to pick up the soap
2) Back against the wall
3) Wait for AndyW to drop the soap.

hth

[deforce]

Options

1) Bend down in the shower to pick up the soap
2) Back against the wall
3) Wait for AndyW to drop the soap.

hth

Hehe,
Just phoned him; he says he's going to lend it to some bloke who's trying to buy a tat shop.......

[oraclesmith]

Options

1) Bend down in the shower to pick up the soap
2) Back against the wall
3) Wait for AndyW to drop the soap.

hth

4) Pick up the soap, shove it up Andyw's ars* and pretend it never happened.

[Ardesco]

Actually it is the agency that will get screwed over by the VAT man. His freinds invoices asked for a set amount of VAT money (Lets call it £1000). His freind has then paid customs and excise (or whatever they are called now) the £1000 he asked for. If the agency then claims back £1500 VAT customs and excise will ask the agency to prove that they paid out £1500 in VAT. They will only have an invoice for £1000 VAT hence it is them who are defrauding the VAT man.

Once they realise thier error they will ask for it back, I am not suggesting you don't pay it back as that would be theft, but you may as well make some interest off it while you are waiting hence whack it in a high interest account.

[MarillionFan]

"Just phoned him; he says he's going to lend it to some bloke who's trying to buy a tat shop......"

20% per day he asked for. Bargain!!!