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Splitting an invoice of Net and VAT

Client's requesting Net and VAT be put onto two separate invoices

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Some advice please. Client (Council) says they can't claim VAT on our work (engineering consulting), so they are asking the Net and VAT be put onto two separate invoices. The client will pay the Net and a water company will pay the VAT. The water company is working with the council on this particular project.

Is there any issue with this? I haven't come across it before and can't find anything on HMRC, unsurprisingly!

thanks in advance

Replies (5)

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By Accountant A
13th Jun 2019 10:04

One for your accountant, I think.

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By beck1747
13th Jun 2019 11:00

I do recall something similar regarding insurance claims where the VAT is paid by the claimant and the net is paid by the insurance company.

May be a good place to start your research?

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By paul.benny
13th Jun 2019 11:05

This kind of splitting is normal when insurers settle motor claims made by VAT-registered businesses. The repairer bills the insurer for the net amount and the business for the VAT element. I’ve also seen something similar in a different context.

It seems OK to me but as AccountantA says, you may want to take other advice.

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Replying to paul.benny:
By Wilson Philips
13th Jun 2019 11:30

In that case the garage is making a supply to both the insurer and the motorist.

In this case, who is the supply to? If the contract is directly with the Council then I'm not sure that it would be appropriate to raise an invoice in someone else's name.

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Replying to Wilson Philips:
By paul.benny
13th Jun 2019 11:36

Fair point. The OP says that the water company is working with the council, but as you say, we don't know the exact contractual position.

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