Can agency hold my VAT payment

[Bronco Billy]

I've had a similar thing happen when issuing my first invoice to a direct client. Even though I had quoted my VAT registration number in advance, they only paid me the net invoice amount.

When I queried it, they told me that they needed me to provide my VAT registration certificate, and then issue a VAT-only invoice for the outstanding VAT on the previous invoice.

I provided my VAT registration certificate the very next day, and they paid me the VAT amount the following Friday. There was no need for me to issue the VAT-only invoice in the end either.

[Clare@InTouch]

thanks for response, I was just curious if agents could legally withhold tax.

They aren't technically withholding the VAT specifically, they are withholding 20% of your invoice value that just happens to be the same amount as the VAT element that you'd charged them.

Same thing in your view, but a slight difference from a legal perspective.

[diesel]

God knows. It's quite a esoteric point, and I'm not sure it's ever been legislated or litigated expressly.

Generally the legal system doesn't bother itself with vat, just gross invoice amounts with vat if applicable.

In turn, vat can only be charged under tax law if you are validly registered (yes) and issue a tax invoice (yes). From this perspective the agency can't deny vat payment merely because the name on the certificate differs especially if you've supplied a link document.

However HMRC can knock back the vat recovery by the agent (or any one else who claims vat) if the supplier charges vat fraudulently. Whether they wil depends on issues around whether the customer acted diligently in checking suppliers credentials etc. So a hyper cautious customer, I.e. your agent, could take the stance you are seeing.

Which way it would go in court, god knows. Small claims judges make decisions without much reference to precedent.

However... You are on the back foot if you haven't got the certificate changed with HMRC as there is a vat requirement to notify changes like this promptly. You could be in a penalty position, even though no tax has been lost.

That breach of vat regulations gives the agent the moral high ground IMV.

Sorry , when law, tax and HMRC practice come together it isn't always black and white.

thanks for response, I was just curious if agents could legally withhold tax.

[Jessica@WhiteFieldTax]

God knows. It's quite a esoteric point, and I'm not sure it's ever been legislated or litigated expressly.

Generally the legal system doesn't bother itself with vat, just gross invoice amounts with vat if applicable.

In turn, vat can only be charged under tax law if you are validly registered (yes) and issue a tax invoice (yes). From this perspective the agency can't deny vat payment merely because the name on the certificate differs especially if you've supplied a link document.

However HMRC can knock back the vat recovery by the agent (or any one else who claims vat) if the supplier charges vat fraudulently. Whether they wil depends on issues around whether the customer acted diligently in checking suppliers credentials etc. So a hyper cautious customer, I.e. your agent, could take the stance you are seeing.

Which way it would go in court, god knows. Small claims judges make decisions without much reference to precedent.

However... You are on the back foot if you haven't got the certificate changed with HMRC as there is a vat requirement to notify changes like this promptly. You could be in a penalty position, even though no tax has been lost.

That breach of vat regulations gives the agent the moral high ground IMV.

Sorry , when law, tax and HMRC practice come together it isn't always black and white.

[diesel]

I never had this problem with other agencies, but a few years ago I changed my company trading name to another.

I always issued agencies my original VAT certificate (which had now old trading name Ltd) and Companies house name change certificate.

However, about to start a new job with a new agency and they said they will not pay my VAT till they get an up to date VAT certificate - just curious can they do this legally?

(I have today asked HMRC for a new VAT certificate which could take 2 weeks by post)