This one is a first for me.
A classic situation has arisen whereby a supplier was late (talking years) registering for VAT, is caught and wishes to provide a VAT only invoice to a customer for £200 calculated on the £1,000 he originally invoiced.
The customer (for several reasons) is not happy and drags their heels and after months is told that the supplier has negotiated with HMRC and the VAT is now reduced to £167 and so now replaces the old invoice with a new one for the £167.
Reading between the lines HMRC have got fed up waiting and so have gone to the supplier for the VAT inclusive sum, but is he now trying it on in still getting the customer to get him off the hook, by collecting the £167 input VAT of HMRC to pass on to him?
When I've come across these situations in the past, if the customer has ignored the supplier s/he will not hear again from them again, they have to foot their own VAT bill.
Any views/ideas?
Thanks
Replies (2)
Please login or register to join the discussion.
Your client should be happpy
As the supplier has treated the amount received as VAT inclusive (correctly) and issued your client with a VAT invoice, then your client's cost have reduced by the Input VAT reclaimed from HMRC. Your client should be thankful that the supplier provided a tax invoice. Your client cannot pass thew Input tax claimed as he has already paid the supplier. If the supplier wants £1000 net he will have to invoice your client for the £167 plus VAT which is acceptable.