VAT - Two sources of Funds for payment!

Posted by Democratus PM | on Fri, 25/03/2011 - 16:09 897 5 comments | report

Have a contract with customer A - job is standard rated.

For reasons too complicated to go into regards funding and guarantees upstream we have payments coming from two sources. Customer A is billed a percentage of the valuation with VAT as standard. Source B is not VAT registered and only involved in funding. Unlikely to accept VAT as part of their funding bit.

Can i bill Customer A for their percentage of the valuation but 100% of the VAT on one invoice and Source B for the balance of valuation funds due?

This is an awkward one, I don't want to get into why we have such a contract, just looking for a view on this proposed solution.

Thanks in advance

Comments

unfortunately detail required

tom2another | Fri, 25/03/2011 - 16:42 | Permalink

Because "the simple sales tax" requires so many various bits of information as to whether some thing is VAT able or not, especially with regard to land and property, your question is too vague.

Essentialy one would need to know what the contractual arrangements are, as payment is not the criteria.

So if the contract is with A - that's who you invoice and charge VAT.

If B are paying, thats an arrangement between A & B and nothing to do with you. If B want to see copies of the invoices to release funds that doesn't mean you invoice them.

Tom

@tom2another

Democratus | Mon, 28/03/2011 - 09:17 | Permalink

Essentially you are correct in that the payment detail is a side issue and that's where my thinking is being directed. The contract is with Customer A and I believe that ultimately they are responsible for paying the VAt irrespective of who pays us.

Whilst it's not really my problem i also believe that Source B is not registered for VAT and thus Customer A will have difficulty in passing on upstream the VAT cahrged by us. However the implications make the task more difficult.

Thanks Tom

VAT two income sources

Wolly | Mon, 28/03/2011 - 09:52 | Permalink

Two questions come to mind:-

1: Are customer A VAT registered?

2: Who is responsible for providing source B with the information for them to pay you?

If customer A is VAT registered, and is responsible for providing the information to source B for the funding payment, surely the question of passing on VAT to the funding source B becomes irrelivant as customer A would be reclaiming the VAT anyway.

@ Wolly

Democratus | Mon, 28/03/2011 - 11:54 | Permalink

Customer A registration isn't an issue as it's either recoverable upstream or irrecoverable as the works are obviously not zero rated or i wouldn't have a problem.

The Project QS engaged by Customer A does the Certificates for payment, so that's the source of info.

I'm convinced that Customer A is billed for all of the VAT irrespective of any funding splits. My only worry is Customer A accepting this. Still, if in doubt i can always get a Written Enquiries Team view from HMRC.

Thanks again