Reply to: Unpaid VAT invoice - advice please

[Alan @ BroomeAffinity]

Precisely my point. And on the face of it you've been told to do the wrong thing.

[monkeygeorge]

I wasn't offered a choice, I just do what I'm told!

[Alan @ BroomeAffinity]

Well its half of one 6 of the other.

Technically you're right but also wrong.

If you are on cash accounting you use payment date for vat stuff.
If you are not you use invoice date.


No rules on which to use just decide one and stick with it. If his accountant chose to use invoice date then his accountant is right in this respect. If his accountant chose payment date (unlikely considering its paid) then he is wrong.

Its not for the accountant to choose. The accountant should look at the parameters and make suggestions as to the most appropriate course of action. The contractor should make a decision based on that advice.

[Sockpuppet]

With respect, your accountant is wrong. You categorically do not have to declare VAT on your VAT return until it is paid. I suggest you take this matter up with your accountant as a matter of urgency.

Well its half of one 6 of the other.

Technically you're right but also wrong.

If you are on cash accounting you use payment date for vat stuff.
If you are not you use invoice date.


No rules on which to use just decide one and stick with it. If his accountant chose to use invoice date then his accountant is right in this respect. If his accountant chose payment date (unlikely considering its paid) then he is wrong.

[blacjac]

I would phone HMRC and tell them that one of your suppliers is refusing to pay VAT, however this was not picked up by your accounts team until after the VAT return was submitted.

I am sure they would be very helpfull when they find out someone is witholding VAT

[ASB]

1) you should only be declaring it it's vat return when it is ISSUED if you are using accrual accounting for VAT.

2) You can correct errors on your next vat return if < 2k (check HMRC to ensure that figure is correct).

3) If they don't pay it and it becomes a bad debt then you can write it off anyway - but this does mean you've done all the chasing etc needed.

[Alan @ BroomeAffinity]

I've already paid it, so it's too late now, isn't it?

Its too late to do much about it but I'd look carefully at your accountant as he seems to have given you bad advice.

[malvolio]

Would the HRMC care if they already have their money?

Yes. Someone is hanging on to money that doesn't belong to them.

First rule of business - never, ever, piss off the Vatman...

[monkeygeorge]

With respect, your accountant is wrong. You categorically do not have to declare VAT on your VAT return until it is paid. I suggest you take this matter up with your accountant as a matter of urgency.

I've already paid it, so it's too late now, isn't it?

I think they will find they are obliged to pay, and if they refuse, it is to be reported to HMRC.

Would the HRMC care if they already have their money?

[blacjac]

Yes, I had the VAT registration backdated.

I'll contact the VAT office if this goes on much longer, thanks.


It would be good if the agency would actually respond to me and actually confirm they're not obliged to pay!

They kept saying they'll look into it and recently ignored me completely.

I think they will find they are obliged to pay, and if they refuse, it is to be reported to HMRC.

[Alan @ BroomeAffinity]

Yes, the invoice was marked "VAT registration pending".

I asked my accountants about whether it would be HRMC's loss or mine and they said I would have to declare all the VAT due regardless of whether it has been paid. They completed all my VAT forms.

With respect, your accountant is wrong. You categorically do not have to declare VAT on your VAT return until it is paid. I suggest you take this matter up with your accountant as a matter of urgency.

[monkeygeorge]

Did you have the VAT registration backdated?

If so you can either file against the company - do a search for bad payers theres a couple of links to websites.

You can also contact your VAT office and advise them of it - I doubt the agency will like HMRC sniffing around...

Yes, I had the VAT registration backdated.

I'll contact the VAT office if this goes on much longer, thanks.

Don't forget, the payment of retropsective VAT bills is not actually part of your contracted payment terms. You might just be stuck in their 90-day payment terms cycle.

Still chase them up though !

It would be good if the agency would actually respond to me and actually confirm they're not obliged to pay!

They kept saying they'll look into it and recently ignored me completely.

[malvolio]

Don't forget, the payment of retropsective VAT bills is not actually part of your contracted payment terms. You might just be stuck in their 90-day payment terms cycle.

Still chase them up though !

[Bluebird]

Did you have the VAT registration backdated?

If so you can either file against the company - do a search for bad payers theres a couple of links to websites.

You can also contact your VAT office and advise them of it - I doubt the agency will like HMRC sniffing around...

[monkeygeorge]

If you marked the original invoice "VAT Number Pending" or something similar then they are more or less duty bound to pay the VAT to you on a retro invoice. It makes no odds to them as they wll be able to claim it back on their VAT return. Just treat it like any other debt and hit them with a 7-day letter.

Why have you paid it over to HMRC already? Surely for cash flow purposes you would be using the VAT cash accounting method.

Yes, the invoice was marked "VAT registration pending".

I asked my accountants about whether it would be HRMC's loss or mine and they said I would have to declare all the VAT due regardless of whether it has been paid. They completed all my VAT forms.