We are a contstruction company & had a VAT inspection in March '19. HMRC found that whilst working on zero & 5% rated projects we were incorrectly paying a subcontractor 20% on their labour invoices. As a result we had a Quartelry return refund of £32k reversed and were issued with a £10k bill instead and a suspended fine.
We notified the subcontractor and presented them with all the documentation they would need to submit a V652 refund to HMRC so that the money could be returned. At present they have not responded to our emails or letters. They are sketchy if and when we are able to speak to them on the phone.
I think they may have filed a v652 but not for the ammount we are asking - it may be that they have also paid subcontactors who are vat registered in the same way but they have not made anything clear to us about what they have done.
Where do we stand with HMRC? - If all VAT monies were paid to them by the subcontractor would they review the decision and reverse it? Originally they had looked at 2 years of similar errors but chose only to request the repayment from the last VAT quarter - they understood our argument that this was a paper exercise and would bankrupt our company if were hit with a bill for hundreds of thousands!
Should we invoice the subcontractor for the VAT incorrectly charged? We know they have had some financial issues so are concerned this money wont materialise if it was paid to them by HMRC. Do we file a winding up order on them or go for CCJ?
Your help appreciated!