We have been asked to do some work on a property which is held in a trust, with 2 ltd companies acting as joint trustees. The solicitors have asked us to send 1 invoice made out to both trustees. I am not sure that this would constitute a valid VAT invoice and there are also possible issues around our PI insurance that our solicitor has asked us to cover off as part of the appointment.
If we can successfully cover the appointment side, would it be a valid invoice to raise it with both the company trustee names on? I'm aware that a trust itself is not a legal entity so we should not invoice the trust itself.
Thanks
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I assume people are still waiting for your response/thanks to their replies on the same/similar question you posted last month.
https://www.accountingweb.co.uk/any-answers/invoice-2-separate-companies...
With it being a while since I posted and only today having received further information on it, I decided it would be easier to start a new post with better information. Not sure why there would be an issue with that David?
It would seem to indicate that the prior contributions from responders are totally worthless
That may be your opinion, but politeless would be to link prior thread.
My opinion
Get money up front and bill once money received
It didn't indicate that at all, I used the information I received at the time but am now in receipt of new information from the client's solicitors (ie the Trust) and simply decided a new post would be the easiest way to ask the question. Apologies if I have broken some forum etiquette that I wasn't aware of. Not intentional. I have since provided the further information on my original post and am not looking to offend, just looking for thoughts on something that may not be straightforward and I haven't come across before.
Basil and Jason were on the old thread.
Those replies are worth a grand any day of the week.
Basil does not reply as much as an idiot like me, because his replies tend to be researched
Jason is one of the two experts on VAT that provide articles on this site
Jeese, that old thread had so much value
Missed it coz I was in Spain at the time
So (as this point emerged as key on your previous thread) - how many customers are there?
That's more a legal point than an accounting one, but I see you have a solicitor, so all is rosy - ask them.
The contract isn't agreed yet, there is a draft with no names in it. We are raising the contractual issues separately, but the question was around whether it would constitute a valid VAT invoice even if the contract were in both company names and whether the joint Trustees aspect changes any of the previous responses. Our solicitor can't advise on the VAT aspects.
Our solicitor can't advise on the VAT aspects.
That's not actually what this forum is for either. As you can read in the Owner's Handbook (https://www.accountingweb.co.uk/any-answers/how-to-use-any-answers), "If you intend to plan a course of action based on what you read in here, you should instead be taking professional advice".
A more formal disclaimer is in the terms of use (https://www.accountingweb.co.uk/terms-and-conditions-of-use).
FWIW, I don't see a problem (in treating the two trustees as if there were one person). But I wouldn't trust me; others in here tell me I'm wrong about everything.
So very British of you
Usually it is only Justin, but we all fail Justin's checklist of skills
As TD doesn't quite say ... if you issue the invoice to two people (who don't represent a single entity), then what will you do (or expect to do) when one of them won't pay 'their portion'?
Surely sorting out the contract should take precedence over how to issue (post-contractual) invoices?
I'm not sure attempting legal recovery from 2 companies would be an issue when they're being invoiced as joint Trustees - they're jointly liable legally due to this aspect I think?
(Why) does it matter? You will account for the VAT you charge; I presume the Trustees will not reclaim it. Who is going to question or challenge what you do?
I've concluded no further concerns other than speaking to solicitor about the contractual side to see how we need to cover that off, in case the Trust situation changes that situation.
The simple answer to your question is 'yes'. But you should only invoice the person who contracted with you, where 'person' includes the trustees as a body. I make this point despite others having already done so as it doesn't seem to have sunken in.
If the trust is registered for VAT (eg if it has opted to tax the property it owns) then it would want a single invoice from you and would probably want a single invoice in any event.
Out of interest what are the insurance 'issues' and how does the identity of your customer(s) or billing practice affect your liability for negligent work etc? Does it affect to whom you owe a duty of care?
I’m aware of the contractual side, I’m not concerned about that as we’re addressing already, but there is no contract in place yet to check client against. Not sure why you say it hasn’t “sunken in” and I find that comment patronising.
The insurance issues are due to the type of work we do, engineering consultancy, and our PI insurance, in that we would potentially end up double exposing ourselves to a claim if the contract is not set up correctly.
I'm sorry for patronising you. But why would the contractual side differ from the invoicing side? You contract with X, do the work per the contract and then you bill X. Why would it differ from that?
I don't understand the double exposure point. If you were liable to X and Y for negligence that costs £100K to fix then wouldn't X and Y 'share' the £100K rather than they get £100K each? If your PII is inadequate then you should increase your cover.
Not sure why this is a problem. All jointly owned property is held in trust. So if a builder does work for Mr & Mrs Jones on their jointly owned home he could address his invoice to them as bare trustees as follows:
Mr & Mrs Jones as trustees of 10 Acacia Avenue for themselves as joint tenants.
https://www.gov.uk/hmrc-internal-manuals/vat-registration-manual/vatreg1...
https://www.gov.uk/hmrc-internal-manuals/vat-registration-manual/vatreg1...
I don't see that it makes much difference for other types of trusts, except there will be no nomineeship. (Although if you bill a nominee I believe VAT looks through to the principal or beneficial owner re place of supply etc.)
But compare that position to that explicitly provided for by say s69(1) TCGA 1992. Or s474(1) ITA 2007. The VAT position would be more certain if there was a similar provision in VATA 1994. There isn't, which omission makes the OP's question a good one, I think. (The links you provide confirm HMRC basically acts as if there were an explicit rule of this kind, but then the links throw words like "normally" into the mix, which muddies the position - to my mind unnecessarily.)
(IHT as you know works rather differently and doesn't need - or have - an equivalent rule.)
@ lucybrown162 (OP).
[A]. VAT Invoice. You say:-
“The solicitors have asked us to send 1 invoice made out to both trustees. I am not sure that this would constitute a valid VAT invoice”.
You also say:-
“If we can successfully cover the appointment side, would it be a valid invoice to raise it with both the company trustee names on?
I can see no reason whatever why you should, from a VAT perspective, have any doubt that an invoice showing the names of the two trustee companies would be valid – it would indeed be valid as long of course as it includes the other information required by the legislation. If your concern is, as would appear to be the case. The NAME(S) to which it is addressed, this is the GOV.UK guidance:-
VATREG12800 - Entity to be registered: trusts and pension funds: VAT treatment of trustee activities - HMRC internal manual - GOV.UK (www.gov.uk)
That guidance should hopefully assure you that, as long as the names of the trustees are shown (at least impliedly also indicating the name of the Trust which they represent) then such invoice will be in order.
Hence, an invoice addressed, for example, to:-
“ABC Ltd and DEF Ltd (the Trustees of The Oceania Trust)”
should be perfectly in order.
[As a general comment, frankly the name(s) on the invoice are not always especially important. The important point is that the only persons potentially entitled to recover VAT charged on an invoice are those persons who have RECEIVED the supply. Whilst ideally the name on the invoice should be the person who has received that supply, there are occasions where the invoice is addressed to a person who does NOT receive the supply. There are many Tribunal cases where the person adjudged to have received the supply is not the person whose name is on the invoice. This can result in the Tribunal’s finding (a) that a person’s Input Tax claim was incorrect, notwithstanding their name being on the invoice, as they were NOT the recipient of the supply; or (conversely) (b) that a person IS entitled to an Input Tax claim despite their name NOT being on the invoice].
[B] Non-VAT matters. You refer to:-
“possible issues around our PI insurance that our solicitor has asked us to cover off as part of the appointment”.
If you indeed “cover off” those “possible issues”, then I see no problem re that PI insurance aspect. Nonetheless, given that PI insurance has been raised, you will need to make a judgment call as to whether you sign the contract, drawing an equation between (i) the income to be generated by the contract and (ii) the degree of risk of a PI claim, measured in conjunction with the quantum of the loss which would arise if a PI claim ensued (together with its attendant non-economic adverse effects).
Basil.
Correction to my last post:-
" . . . appear to be the case. The NAME(S) to which . . ."
should read:-
" . . . appear to be the case, the NAME(S) to which . . ."
Sorry [AWEB's over-zealous responses to attempting to edit my posts result in such posts being condemned to solitary confinement for about 24 hours, before seeing the light of day !!].
Basil.
