Do I have to pay corporation tax and/or VAT on fees award by CCJ?

[Lance]

Why would I pay tax on expenses incurred due to winning them back in court?

This isn't hard........
You pay an expense.... That reduces your profit and therefore your tax.
You are reimbursed that expense, that replaces the lost profit and you have tax to pay on that.

If you are awarded more money by the court than you incurred (compensation etc.) that is more profit on which you pay tax.

If you raise an invoice then VAT MUST be added as to not do so would be illegal. If you raise an invoice for the expense that is the same, immaterial of whether VAT was paid by your company on the fees.
The only way that a non-VAT item can be passed to a client without adding VAT is if it's a disbursement. For that you'll need an accountant to tell you. if it is but I seriously doubt it's a disbursement as there are clear rules on those and a CCJ doesn't fit them.

[WTFH]

Why would I pay tax on expenses incurred due to winning them back in court?

OK, you pay CT on your profits.
When you paid for the fees it came out of your profits, so you reduced your CT, because you had less profit.
Now you’ve got that money back, you can pay the CT that you would have paid, if you’d not had to pay the fees

You’re not paying extra tax, you’re paying the tax that you offset.

(I am not an accountant, so this could be completely wrong. You have to look at the overall picture, not just a single transaction)

[northernladuk]

I have only had one client at a time and when they stopped paying me I found a new one and got CCJ against the old one. Where might I find one of these few accountants you speak of? This is my first day here and it doesn't seem very welcoming.

Maslins is one. He posted pretty early in the thread. He's always happy for people to ring him and he'll give you 30 mins free. He's nice like that but don't expect him to buy you a drink, he's not that nice.

[oneshot]

OK, so you have one client, hence one transaction a month, and the company has won a CCJ on late payments - presumably by your single client. And you're still trading with them?

Anyway, you don't routinely need an accountant - well that's your call of course - but any half decent one would give you 10 minutes free advice on a fairly technical one-off question. There's a few on here, try one of them.

But running your company for you for free is not what we're here for...

I have only had one client at a time and when they stopped paying me I found a new one and got CCJ against the old one. Where might I find one of these few accountants you speak of? This is my first day here and it doesn't seem very welcoming.

[northernladuk]

But running your company for you for free is not what we're here for...

But our advice is worth every penny he pays for it

[malvolio]

OK, so you have one client, hence one transaction a month, and the company has won a CCJ on late payments - presumably by your single client. And you're still trading with them?

Anyway, you don't routinely need an accountant - well that's your call of course - but any half decent one would give you 10 minutes free advice on a fairly technical one-off question. There's a few on here, try one of them.

But running your company for you for free is not what we're here for...

[oneshot]

Did you pay the fees out of your company?
How did your accountant record those fees when they were paid?
Why do you think you would or would not be paying CT on the fees?

As for VAT, there is no VAT on Court Fees.

Yes
I don't have an accountant, see the above reply.
Why would I pay tax on expenses incurred due to winning them back in court?

[oneshot]

Why don't you have an accountant?

I don't have one. I have 2 transactions per month on my business account. 1 from a client and 1 to my pension (this isn't my main job). Why would I pay more than 1k per year to an accountant for that? If I have to pay tax on this one small thing so be it but I thought I could seek some free advice here.

[WTFH]

I'm using FreeAgent, it will let me edit old invoices or make new ones so long as it is in the same tax year. I just want to know if I should be paying corporation tax and/or VAT on the fees I have been awarded. If I know this I can figure out what I need to do.

Did you pay the fees out of your company?
How did your accountant record those fees when they were paid?
Why do you think you would or would not be paying CT on the fees?

As for VAT, there is no VAT on Court Fees.

[northernladuk]

Why don't you have an accountant?

[oneshot]

Depends what you did with the original invoice.

If you left it as is on your accounting software (ie still a valid invoice expected to be paid), then by adding another invoice now CCJ is awarded, you're duplicating all but the interest/court costs bit. Ie you should just be adding an invoice for those extra items, not the whole invoice again.

If you'd written the old invoice off at some point as unlikely to be paid, then what you've done now (and how your accounting software's treating it) sounds correct. When you wrote off the invoice, your software should have corrected for VAT/CT paid/payable on the initial invoice.

I'm using FreeAgent, it will let me edit old invoices or make new ones so long as it is in the same tax year. I just want to know if I should be paying corporation tax and/or VAT on the fees I have been awarded. If I know this I can figure out what I need to do.

[oneshot]

What fees were awarded?
Do you have receipts for those fees?

The fees to make the claim were added to what they have to pay me: https://www.gov.uk/make-court-claim-...ney/court-fees

[Maslins]

Depends what you did with the original invoice.

If you left it as is on your accounting software (ie still a valid invoice expected to be paid), then by adding another invoice now CCJ is awarded, you're duplicating all but the interest/court costs bit. Ie you should just be adding an invoice for those extra items, not the whole invoice again.

If you'd written the old invoice off at some point as unlikely to be paid, then what you've done now (and how your accounting software's treating it) sounds correct. When you wrote off the invoice, your software should have corrected for VAT/CT paid/payable on the initial invoice.

[WTFH]

I have gotten a CCJ against a client who didn't pay their invoices. https://www.gov.uk/make-court-claim-for-money

I've added the fees and interest to the original invoice using my accounting software and it seems to be adding VAT and counting it as income for corporation tax. Is this right? I would have thought I don't have to charge VAT and pay corporation tax if it is to reimburse my company for the costs incurred. This is through my limited company based in England that changes things.

What fees were awarded?
Do you have receipts for those fees?

[oneshot]

I have gotten a CCJ against a client who didn't pay their invoices. https://www.gov.uk/make-court-claim-for-money

I've added the fees and interest to the original invoice using my accounting software and it seems to be adding VAT and counting it as income for corporation tax. Is this right? I would have thought I don't have to charge VAT and pay corporation tax if it is to reimburse my company for the costs incurred. This is through my limited company based in England that changes things.