Is reinvoicing a different company acceptable?

Is reinvoicing a different company acceptable?

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I have a customer that has previously invoiced a customer for work, which after nearly 1 year hasnt been paid. The invoiced customer is on the verge of going into liquidation & has set up a new limited company. They have asked my customer to invoice the new limited company & then they will get paid, for the original work

Is this acceptable?

Many thanks

Replies (22)

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By Mouse007
25th Sep 2013 22:21

Does your client

want to be paid or not?

 

 

How the new company accounts for it is a matter for them, do you need to speculate on the matter?

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Replying to mrme89:
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By gedmond72
25th Sep 2013 22:23

Yes of course but I didnt think it was acceptable 

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By johngroganjga
25th Sep 2013 22:26

Yes it's acceptable but don't issue a credit note against the old invoice until the new one has been paid with cleared funds.

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By Mouse007
25th Sep 2013 22:28

Not Acceptable?

to whom?

I presume you don't act for new company.

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By LucasJohnson
26th Sep 2013 00:11

May not be acceptable if

newco itself falls over, but this is more of an issue for newco and its management, not the supplier, although supplier is not impervious to recourse.

 

Beyond that, call me cynical but if the debt hasn't been paid for a year the supplier clearly isn't important to the customer, so what are the chances of it being paid by newco?  But if oldco is on the verge of liquidation (feel free to pm if they need to find a liquidator) your customer definitely won't be paid, so why not try!?

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By johngroganjga
26th Sep 2013 08:58

@Basil is making numerous assumptions.

For example he is assuming that the invoice the creditor issues to Newco says something like "For x goods / services supplied to you (Newco) on y date".  That would indeed be a false instrument as the goods or serviced referred to would be purely fictitious.  But what if it says "Request for payment issued at your (Newco's) request in respect of our invoice no. x issued on y date to Oldco"

Then he is assuming  that Newco is acting without the knowledge of the liquidator.  But what if Newco is sharing with the liquidator details of the payments he makes to the creditors of Oldco so that (a) the liquidator knows that those liabilities are discharged, and (b) Newco stands in the shoes of those creditors to the extent of any dividend they would have been entitled to.

 

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By Mouse007
26th Sep 2013 09:25

Jumping to conclusions

We don't know enough and are under no obligations to ask. New co is not a client and not seeking advice from us.

We don't know what the nature of the work was, nor who has the benefit of that work.

We don't know what agreement exists between new and old co.

We will not be involved in the accounting and taxation affairs of new co.

The invoice is a request for payment, that is not a false instrument if it clearly refers to the correct work done and not something else.

The New co may be entirely above board.

I don't think we should go sniffing out trouble or jumping to conclusions without clear evidence.

 

Edit: was typing while John posted, agree with him

 

What was that saying? a watchdog not a bloodhound.

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Replying to DJKL:
By Mouse007
26th Sep 2013 13:40

Not so

fawltybasil2575 wrote:

an invoice is issued by a supplier to a customer in respect of goods and/or services supplied by the issuer of the invoice to the person to whom that invoice is addressed.

 

I can ask the school to invoice my employer/company for my childrens' school fees...a taxable benefit.

I can ask the builder to invoice my Mum for the extension... she offerred to pay.

 

Supply to me, invoice to a third party. Of course there may be consequences, one of which could be attempted fraud (granted), but is it for the supplier to second guess what these may be?

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Replying to lionofludesch:
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By The Black Knight
01st Oct 2013 12:35

the bleeding obvious

Mouse007 wrote:

Supply to me, invoice to a third party. Of course there may be consequences, one of which could be attempted fraud (granted), but is it for the supplier to second guess what these may be?

yes but sometimes its just obvious what the intention is.

Home carpets and TV being billed to the office as office carpets and huge monitor?

both parties have been involved in the evasion of tax and vat.

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Replying to mrme89:
By johngroganjga
01st Oct 2013 14:27

What does the invoice say?

The Black Knight wrote:

Home carpets and TV being billed to the office as office carpets and huge monitor?

both parties have been involved in the evasion of tax and vat.

Supplier is not involved or complicit an any fraud if he words his invoice correctly.  Hence my advice above that OP should ensure he does the same.

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Replying to lionofludesch:
Old fat furry cat-puss
By bagpuss1968
11th Oct 2013 13:50

School fees....

...but the school is under no obligation to acquiesce to your request.

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By Marion Hayes
26th Sep 2013 14:21

with Basil here

Invoices for services rendered was the phrase I always heard, and dictated.

If the new company is taking on the debts of the old there is no need for a new invoice, and if not why is your client so privileged.

 

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Replying to atleastisoundknowledgable...:
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By gedmond72
01st Oct 2013 08:03

Thanks to everyone that has taken time to reply to my question, all appreciated.

The invoice will have the same description as the original invoice & yes there will be vat charged.

The new company is only taking on a couple of debts from the old company. When I say selected I mean favourites, not the hmrc etc!!!!

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Replying to stepurhan:
By johngroganjga
01st Oct 2013 12:22

Careful

gedmond72 wrote:
Thanks to everyone that has taken time to reply to my question, all appreciated. The invoice will have the same description as the original invoice & yes there will be vat charged. The new company is only taking on a couple of debts from the old company. When I say selected I mean favourites, not the hmrc etc!!!!

Your invoice should be worded carefully to say that it is a charge for goods supplied to the old company (naming that company) otherwise you are acting illegally by issuing a false instrument.  Secondly, when you have received payment you should raise a credit note against the old invoice (addressed to the old company - in liquidation) and send it to the liquidator explaining that you have received a payment from the new company (naming it) which you are happy to treat as discharging the debt due to your company by the old company.

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By The Black Knight
01st Oct 2013 12:17

with Basil

You are assisting a money laundering offence.

My view would be: Invoice required to claim a tax and vat deduction in new co for a service and or contract that never took place! FRAUD Why else would you need an invoice?

In reality as Mouse said " do you want your money" No one cares anyway.

Cover your [***] by making a money laundering report (nothing will be done but it sanctions transaction)

Be careful (have seen) this is away of stopping you from turning up at the creditors meeting and demanding that the liquidator does his job and pursues the directors for wrongful or fraudulent trading as he is supposed to act in the best interests of the creditors, PS the creditors can change to compulsory liquidation and appoint their own liquidator.

The invoice will never be paid!

You are being scammed!

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David Winch
By David Winch
01st Oct 2013 15:02

My two penn'orth

My reading is that what is being suggested here is that the OP's client should invoice Newco for goods or services supplied to Oldco - and probably supplied at a time at which Newco did not exist. 

If (as seems likely) the intention of the OP's client is that anyone seeing or relying upon the invoice to Newco should believe it relates to goods or services supplied to Newco then that is a dishonest intention - and the OP's client intends to get a financial benefit from his dishonesty (i.e. he will get paid, whereas otherwise he would not be paid).

On that basis OP's client would be committing a criminal offence (there are a number to choose from - theft, fraud, false accounting . . .).

The OP asked, "Is this acceptable?".  On that basis my answer would be, "No".

David

P.S.  It would also appear that Oldco (or its directors) and Newco (or its directors) are engaged in dishonesty too in that they are conspiring with certain of Oldco's (unpaid) suppliers to commit a criminal offence.  The OP needs to consider whether he has an obligation to report a suspicion to SOCA.

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By The Black Knight
01st Oct 2013 15:05

have a look

Have a look at the accounts!

Was a going concern note included and did the directors consider this when signing the accounts for a year after signing.

What position was the company in when it entered into the contract with your client. Did the directors know or should they have known they were in financial difficulty.

Then turn up at the creditors (with other creditors) meeting (or demand one) and appoint your own IP, instead of the one the directors chose, to look after the creditors best interests.

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By gedmond72
01st Oct 2013 22:26

Thanks all. Yes I do realise the seriousness, which is why I have asked the question. It didn't seem right to me but I wanted to see what the views of others were.

I will be advising my client not to issue an invoice to the new company for the services supplied to the old company.

You guys have been a great help, so thanks again.

Gillian

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By Justin Bryant
02nd Oct 2013 11:37

VAT fraud is probably the main risk here, due to Newco presumably being able to claim input VAT on the new (and false) VAT invoice and Oldco presumably also claiming input VAT (and not paying it presumably due to its insolvency). See s72 VATA 1994. In the (unlikely) event the new invoice actually gets paid then there are other potential offences re Insolvency Act etc. as mentioned above. If Newco actually makes a taxable profit and claims the invoice as an expense for a corporation tax deduction then there would probably only be a tax geared penalties for Newco (the expense is not incurred W&E for trading purposes). These are all potentially money laundering offences and I agree that the client needs professional advice

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By johngroganjga
03rd Oct 2013 08:50

But if my advice is taken (see above) there can be no false accounting by Newco as the invoice will plainly state that it is not for goods or services provided for Newco, and there will be no VAT fraud as supplier will issue a VAT credit note to Oldco, and furthemore inform its liquidator of the transaction with Newco,

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By Alonicus
03rd Oct 2013 11:59

Won't HMRC have something to say ?

I admit I'm not an expert in this particular area of company law.  But if Newco has bought any of the assets of Oldco, it it could be argued that the substance (no matter what the form) is that the supplier has been created as an indirect preferential creditor. Some of the value of the assets will be used to pay them, which could mean that HMRC misses out on some of their slice.

I fully appreciate that the supplier wants to (and should be) paid rather than writing the debt off against tax.  But why have they let a debt ride for a year without pursuing it through the courts ?  With (as has been suggested) a more neutral IP installed, could the debt be pursued directly with the directors if wrongful trading can be proven ?

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Replying to Mr_awol:
By johngroganjga
03rd Oct 2013 15:30

Bought for value

Alonicus wrote:

I admit I'm not an expert in this particular area of company law.  But if Newco has bought any of the assets of Oldco, it it could be argued that the substance (no matter what the form) is that the supplier has been created as an indirect preferential creditor. Some of the value of the assets will be used to pay them, which could mean that HMRC misses out on some of their slice.

Your logic assumes that any assets bought by Newco from Oldco have been acquired at undervalue.  We are not told about any such purchases, but if it is an issue it will be all the creditors of Oldco, not just HMRC, who are missing out on their slice.

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