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Am I obliged to refund VAT charged to an EU Co.?

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In mid 2015 I supplied services to an EU company based in Germany. I (perhaps incorrectly) invoiced them and charged U.K. Vat at 20%. They paid the invoice including the vat, and I in turn paid it to UK HMRC. 

Now, approx. 2 years later I have just received an email from a South African company working on behalf of my German client demanding that I refund the VAT and pay directly to the South African company's bank account. Am I obliged to do so? 

Also, If I do refund the VAT amount, would there be any way of getting it back from HMRC?

Thanks so much for any help. 

Replies (16)

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By mrme89
22nd Jun 2017 11:00

Although an error has occurred, you have never had dealings with the S African company. Tell them to bugg3r off.

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chips_at_mattersey
By Les Howard
22nd Jun 2017 11:01

You would just show the VAT in Box 4 of your Return, and no need to advise HMRC separately. It is an accounting adjustment, not an error.
Why are you paying the money to the South African company, not the German company? Are you satisfied that this is correct?

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Replying to leshoward:
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By Mmac
22nd Jun 2017 11:11

Thanks Leshoward.

Yes, I believe the SA company are probably legit, as they have sent photocopies of my invoice, an authorisation letter from the German company, and a copy of a letter from HMRC refusing their application to reclaim the VAT from HMRC.
Do you think I should refund the VAT even though this was invoiced two years ago? On the letter to them from HMRC (dated Dec 2016), HMRC advise them that there is a limited time window for them to request a refund...

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By Duggimon
22nd Jun 2017 11:08

Agree that you ought to repay it, that you can probably claim it on your next return and that you should pay it to the German company, not the South African one.

How much are we talking here?

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Replying to Duggimon:
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By Mmac
22nd Jun 2017 11:16

Thanks for your response Duggimon.

On researching how I should have invoiced this, it seems I ought to have requested the German co's EU VAT number and put that on the invoice, and invoiced with 0%VAT and also stated that the invoice would be subject to reverse charge. Then I should have entered the amount on an EU sales list on my VAT return.

Not sure what to do after the event!

The VAT is less than £200.

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By Marion Hayes
22nd Jun 2017 12:25

I may be talking rubbish - again - but if you had been charged VAT by the German company you would have claimed it on your UK Vat return wouldn't you?
So why are they claiming it from HMRC and not the German tax authorities.

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Replying to Marion Hayes:
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By NeilRH
22nd Jun 2017 12:32

Marion Hayes wrote:

I may be talking rubbish - again - but if you had been charged VAT by the German company you would have claimed it on your UK Vat return wouldn't you?
So why are they claiming it from HMRC and not the German tax authorities.


In general, no VAT is applied to a transaction between two VAT registered businesses.
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Replying to NeilRH:
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By Mmac
22nd Jun 2017 12:39

Yes, Neil, this seems to be correct- it seems it wasn't necessary to charge VAT.
What isn't so clear is, if you do charge VAT, as no EU VAT number was supplied by the client, and collect the VAT and pass it on to HMRC, does the (German) client have a right to a refund, and if so, can I reclaim that from HMRC who were paid the VAT by me in error?

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Replying to Marion Hayes:
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By Portia Nina Levin
22nd Jun 2017 12:40

Marion Hayes wrote:

I may be talking rubbish

The word "may" is superfluous there!

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Replying to Portia Nina Levin:
By Marion Hayes
22nd Jun 2017 16:31

Good job I don't do VAT advice then isn't it - although I do remember reading if there was no VAT number supplied you had to charge VAT regardless

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Replying to Marion Hayes:
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By Mmac
22nd Jun 2017 18:48

Hmmm- thanks Marion. They didn't supply their VAT number. I wonder if it should have been my responsibility to request it though...?

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Replying to Marion Hayes:
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By Portia Nina Levin
23rd Jun 2017 10:47

That still isn't correct Marion. You need a VAT number in the case of GOODS going to another EU member state; for services you just need evidence that they are a business.

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Replying to Portia Nina Levin:
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By chatman
26th Jun 2017 10:20

"I be talking rubbish"?

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Replying to chatman:
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By whopkinscom
26th Jun 2017 11:22

"Arrr, that you be!"

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Replying to chatman:
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By Portia Nina Levin
26th Jun 2017 11:47

Tell me something else that's new!

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By ShayaG
26th Jun 2017 15:20

Has happened. Our advice was that this was an error although if the amount of tax is less than £10,000 then it doesn't matter either way. If over £10,000, my 'formal' advice would be to send a correction form to HMRC and await their clearance and refund before remitting to SA. If less than £10,000, just remit and correct. Quotations marks used in the Trumpian sense.

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