vat eligibility

vat eligibility

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me in the direction of checking how to make a vat claim where business A has paid a cost of business B and business A has claimed the vat? I thought you had to use the cost in your business to be able to claim the vat ie who paid wasnt important -it was who used the costs?
help?
vat

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Euan's picture
By Euan MacLennan
15th Jan 2009 18:23

As I said before ...
A has made the mistake of claiming B's input tax and must correct its error on its next VAT return. B is entitled to the input VAT on an invoice addressed to B for goods or services supplied to B and should claim it on its next VAT return, if it has not already done so. Presumably, A will wish to be reimbursed by B for the gross cost of the invoice, but we don't know the relationship between the two companies.

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By User deleted
15th Jan 2009 17:54

thanks all
Penny - you're right - i forgot to mention that business B invoiced - so as long as the invoice is issued to the user of the cost it is irrelevant who has paid for the goods - as it is obviously the user of the cost who is only entitled to vat relief - agreed?
If this was simply incompetence and both parties wished to rectify matters what would be the best way forward?
thanks again

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By skylarking
15th Jan 2009 15:26

Happily
You are both right and that should satisfy the questioner.

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By User deleted
15th Jan 2009 14:15

Yes, but
Euan is correct if the circumstances are as he assumes - but there is nothing in the question that indicates to me who has received the VAT invoice, all that is mentioned is the fact that A paid for the goods/services in question. That is why I asked the question - to start scaremongering about SOCA etc without knowledge of the full facts is a little presumptious!

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Euan's picture
By Euan MacLennan
15th Jan 2009 14:02

Yes, but
... it sounds as if the invoice was made out to B for goods or services supplied to B for use in its business. If so, A has no right to have claimed the input VAT and the matter cannot be resolved by B sending a VAT invoice to A because B has not supplied any goods or services to A. A is wrong to have claimed B's input VAT and on being told this, A should correct the error on its next VAT return; if it does not, it is committing a money laundering offence and should be reported to SOCA.

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By User deleted
15th Jan 2009 13:55

Who has
the VAT invoice?

To recover VAT the claimant must hold a valid VAT invoice in their name.

Assume the services/goods were supplied to B for the purposes of its business but the invoice was raised to and paid for by A. In the first instance, neither business can calim back the VAT as (a) A has not incurred the expense for the purpose of making taxable supplies and (b) B does not hold a valid VAT invoice. What A should do, then, is re-charge B raising a VAT invoice, with B then in a position to recover the VAT.

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