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08th Mar 2019 09:41

Yes - you can reclaim the VAT as the service was provided to you.

You should be looking to recover the net amount from your benefactors. You're not out of pocket by the VAT. In other words, you will have indeed paid the VAT.

This principle crops up regularly in legal fees paid by someone else and also insurance claims. It's a simple issue which is, nevertheless, surprisingly widely misunderstood. You say the law is not clear cut. Actually, it is.

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08th Mar 2019 10:18

The supply is to you, you can reclaim the VAT. B is paying for the services and currently you are charging them a 20% mark up on those which you should be declaring as profit, i.e. for legal services of £1000 your accounting entries are Dr Legal £1000, Dr VAT £200, Cr income £1200, leaving you with £200 VAT to reclaim and £200 profit.

If that is not the intention you should be charging B the £1000, not the £1200.

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08th Mar 2019 11:09

There is also guidance here: https://www.gov.uk/hmrc-internal-manuals/vat-input-tax/vit13300 and check out the link to the Redrow Group case.
Make sure there is no liability to repay the input tax under Reg 172H. Has consideration been received, albeit by a third party payment?

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08th Mar 2019 12:10

Without wanting to pooh-pooh any of the above comments, is it really that simple? What about the strict requirement for the person/entity to be named on the invoice? I know there is an HMRC concession re clients directly paying barrister bills addressed to solicitors (who instruct the barrister) when the word "per" is added and the solicitor's client can cross through the solicitor firm name on the barrister's invoice, but I did not think that name change concession extended to other types of bills.

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to Justin Bryant
08th Mar 2019 12:11

The person reclaiming the VAT is the person to whom the invoice is addressed.

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to Duggimon
08th Mar 2019 12:14

I see! Sorry, I was answering a more interesting question it seems!

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to Justin Bryant
08th Mar 2019 12:23

Justin Bryant wrote:

Without wanting to pooh-pooh any of the above comments, is it really that simple? What about the strict requirement for the person/entity to be named on the invoice? I know there is an HMRC concession re clients directly paying barrister bills addressed to solicitors (who instruct the barrister) when the word "per" is added and the solicitor's client can cross through the solicitor firm name on the barrister's invoice, but I did not think that name change concession extended to other types of bills.

Sure - the paperwork needs to be right. There was no suggestion that it wasn't though.

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20th Mar 2019 12:03

Bizarrely the question has been deleted, but never mind. By complete co-incidence here is a an interesting case published only yesterday on my more interesting input VAT question re invoice addresses etc.

https://www.bailii.org/ew/cases/EWCA/Civ/2019/353.html

https://www.accountancydaily.co/cch_uk/cln/news_008284_praesto

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12th Mar 2019 13:42

So what was controversial about this question ?

Baffling.

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