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Client VAT error

Client has not charged the correct VAT on sales

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My client has undertaken work for a charity and was verbally advised that he did not have to charge VAT. A certificate apparantly confirming this was provided, though it did clearly state that it was the suppliers responsibility to ensure that this advice applied to him. The invoices were picked up during a VAT inspection and my client has, of course, been instructed to charge VAT on the original invoices. The customer is refusing to pay on the basis that my client should have ensured that his supply was indeed non-Vatable. We are claiming that the error was made in good faith and my client was acting on the advice issued by the customer. This would seem a fairly straightforward case, but as my client intends to issue a claim shortly, we wanted to ensure that he was on solid ground in demanding the input tax. How wouyld the experts progress this matter?

Replies (11)

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RLI
By lionofludesch
03rd Jul 2018 10:59

Charities, eh ? Run by nice people.

I'd take them to court.

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By lesley.barnes
03rd Jul 2018 11:21

Have you checked that the VAT inspector has got it right and VAT is chargeable?

Thanks (1)
RLI
By lionofludesch
03rd Jul 2018 11:34

Tell us more about this work. What was done ?

What did the contract say about VAT ?

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By ohwhatnow
04th Jul 2018 09:54

we've come across this a few times - seems so unfair as you can usually only rely on information supplied by the customer. We haven't had any picked up - so haven't had to deal with the fall-out. But we have signed documents from the customers confirming what our supplies are used for - training, vet supplies, medical education etc, etc. How are we to know if this is bone fide - whether they're wrong by error, or deliberately to evade vat?
We've also had some people at charities argue blind that they shouldn't pay any vat - they don't like being told that's not always the case. you have my sympathies.

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Replying to ohwhatnow:
RLI
By lionofludesch
04th Jul 2018 12:23

ohwhatnow wrote:

We've also had some people at charities argue blind that they shouldn't pay any vat - they don't like being told that's not always the case. you have my sympathies.

And why should charities pay VAT ?

Every year, Anton Deck tells us that the Chancellor has waived the VAT on sales of the X Factor Christmas single . If it's good enough for them, why isn't it good enough for small charities ?

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By mominnz
04th Jul 2018 11:07

Look up VAT applicable on Charity and Check where the error is

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By geoffmw1
04th Jul 2018 15:19

The question still hasn't said what the supplies were.
Without that info a correct reply is not possible

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Morph
By kevinringer
05th Jul 2018 16:04

You can't rely on the customer's tax advice. It's in the same category as the mate down the pup. It is the responsibility of the person making the supply to ensure they get correct advice. They can sue their accountant but would hardly have much of a claim against their customer who never held themselves out to be a tax advisor.

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Replying to kevinringer:
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By Sam Beedle
06th Jul 2018 14:45

Not totally true - With a supply of electric or gas a charity makes a self declaration to the utility company that they are supplying a charity building used for non-business purposes and hey presto you have a reduced VAT rate.

Every utility company has a standard form for it and everything

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By paulwakefield1
05th Jul 2018 16:16

" as the mate down the pup"

I think you can still be arrested for that

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Replying to paulwakefield1:
Morph
By kevinringer
05th Jul 2018 16:22

We'll keep it between the two of us ;-)

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