I have requested a copy of a VAT invoice for a purchase made by credit card. The supplier sent me a VAT invoice but charged VAT @ 20% on the gross value. I politely replied and advised them that the invoice was incorrect and asked that they send a modified invoice.
They sent me a modified invoice showing the correct net amount, but no VAT charged on the card processing fee.
I replied again advising the invoice was still incorrect. They told me that the invoice is correct because they do not charge VAT on the card processing fee (they are not a bank or card provider - they provide goods and the goods were paid by card via sagepay).
I asked again for a correct VAT invoice. I was sent an invoice which was completely different again and told that the goods were discounted and VAT charged on the full price.
I have now asked them to just confirm exactly which invoice they are using for their records so I can use the same for mine so the VAT is neutral at least. However, I am concerned that the company is a large company with UK turnover c£19m. Should I pursue this?
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I'd email them and spell out exactly how the invoice should be set out. For example:
Item £100.00
CC Processing Fee £5.00
Net £105.00
VAT £21.00
Gross £126.00
Finish the email along the lines of 'I await your amended invoice and trust you will update your records accordingly'.
EDIT: This isn't a transport company is it?
Currys
EDIT: In reply to your edit - no, it is a straightforward domestic supply of goods.
I would assume Currys then. Their tills don't produce VAT receipts either, much less their invoices. I have to ask them specifically before paying that I need a VAT receipt. They then punch another few keys and sometimes even have to call a manager in order to get the till to produce a VAT receipt (and I've never been able to quite work out how that VAT was calculated, as it doesn't match up with the purchases).
How hard can it be to have their systems produce VAT receipts and invoices by default? There is no reason whatsoever for withholding VAT details regardless of whether it is a consumer or business customer.
Looks like you just have to sit tight and see what they come back with.
I don't think they are being deliberate or dishonest, so no report required. Though this isn't my area of expertise (not much is!).
Publish and be Damned
I would put this into social media, naming the company concerned and perhaps someone in its upper echelons will respond by encouraging the dimwit you're corresponding with to get their act together.
HMRC?
Suggest that you refer it to HMRC for a decision.
Maybe they'll pop round for a chat.
Funnily enough....
I have spent most of my day today chasing VAT invoices and it drives me mad. By the nature of our business we pay quite a few suppliers on pro-formas and trying to get the VAT invoices afterwards is so time consuming. Anyone got any tips? I've tried being nice, I've tried being 'orrid; my latest is to say we have a VAT inspection due and I need to tidy up paperwork - even that doesn't always work as quickly as I'd like. As most of the companies we deal with are fairly larege and using software of some sort how difficult can it be?
Whilst we're on the subject , quite a few come back and say that their pro-forma has the VAT number on it but in my experience, VAT inspectors don't like picking up non-invoiced items. Any thoughts/comments on that?
Pro-forma
A pro-forma invoice is just that - an instruction to pay. It is not an invoice, certainly not a VAT invoice and is not a receipt for payment. Some companies over-use pro-formas in to avoid having to pay VAT until they have actually received payment. When they later send out the invoice (IF they do), it tend to be dated on the date of payment and not on the date of the actual purchase/sales transaction, thus effectively turning accruals-based accounting into cash accounting. Many suppliers lose interest in following through on documentation (e.g. the real invoice) once the money is in their bank account. It is not right.
Our clients tend to have a lot of dealings with EU-based suppliers, and luckily this pro-forma and withholding of VAT details craze appears to be limited to the UK and Ireland. The others send real VAT invoices from the outset, stating payment terms and payment details.
Misguided.
I guess this goes back to what we used to call the Debenhams scheme where it was argued that the CC fee was exempt as a financial service. I won't bore people with the detail but it could have worked if implemented correctly, but as usual it wasn't so it fell at the first hurdle.
I have seen business argue that as the CC fee to them is exempt it must be exempt by them.
Amazing what businesses get away with nowadays once HMRC went to risk assessed visiting!!
If I remember right ......
If I remember right, credit card charges were originally exempt and the law was changed to stop traders switching standard rated sales into exempt credit card charges.
WTF?
We are not here to sort out the rest of the world's problems. The second invoice receieved was perfectly adequate for recovering a perfectly adequate amount of VAT. Claim the VAT, and move on. There is no need to put the world to rights.
@ lion the position changed after the decision in Everything Everywhere, which followed the CPP decision, and that in relation to the Debenhams PITA scheme.
Do VAT inspectors know this?
I know you're right, gem7321, but I've had VAT inspectors - twice - get in a stew because my (correct) posting was not the same as a supplier's invoice. If memory serves the difference in the VAT amount was a princely £2.56 on one occasion! It followed a similar tedious business of what I refer to as "Doing other people's bookkeeping for them", and I was able to show my communications with the supplier to the inspector, but still she complained! I politely suggested she should complain to the supplier, since they were the ones getting it frigging wrong!
@ Basil
The second invoice was not correct (from the supplier's point of view). Following the Everything Everywhere decision a credit card fee follows the liability of the main supply, just like postage/packing/carriage.
However, you are correct that if the supplier had (incorrectly) not charged VAT on the credit card fee, then the OP had the right invoice to recover the input VAT that had been charged.
The subsequent suggestions of reporting it to the auditors got my goat. It is not your problem. Make sure you are doing things right and just move on.
Why people feel the need to police the whole world, just because they once got a bookkeeping badge free with a packet of cornflakes is beyond me.
Auditors
My long association with auditors tells me they will take no notice because this simply won't be material. I think these fees should be exempt as a separate fee charged for handling money, but the courts don't agree, so there you have it.
Somewhat uniquely, I am with PNL on this one - sign of our times that people feel they cannot just shrug their shoulders and walk away and consider that they need to 'shop' people - probably the same cranks who write 1000 word Amazon reviews etc. Imagine if they had a Trip Advisor type service for regular businesses?!
another platform for angry people
Imagine if they had a Trip Advisor type service for regular businesses?!
Now THAT is a good idea!
Hold your horses
The company is very likely accounting for VAT perfectly correctly but is not used to producing full VAT invoices. They must be producing them manually and this is not likely what their system has accounted for.
Why would you even consider writing to the auditors?
Make your mind up everyone
Everyone seems to jump on members who don't do things by the book. We finally have someone trying to do things by the book and they are criticized for it.
I disagree
I think there is a difference between doing it properly (making sure you have a valid VAT invoice to support your VAT claim), and being a busybody (making it your business to get another company to do something right).
I recall a former colleague trying to phone somebody, finding that he could not get through, and then taking it upon himself to phone BT to report the fault, only to get an automated system:
System: "Please tell me the nature of your call."
Colleague: "I want to report a fault."
System: "I am sorry, I did not catch that."
Colleague: "I... want... to... report... a... FAULT!"
System: "You want to puchase broadband? Is that correct?"
Colleague; "NO I WANT TO REPORT A FAULT!"
I had to leap over the desk, and punch him repeatedly, explaining as I did so that IT WAS NOT HIS FRIGGING PROBLEM, AND HE COULD JUST SEND AN EMAIL TO THE OTHER PARTY, ASKING THEM TO CALL HIM, AS THEIR PHONE LINE WAS NOT WORKING.
Poor fellow suffered a heart attack that same morning, and never did email them. Their phone line may still not be working.
Not more
It was all a long time ago, but I had a sales order with the right VAT codes on it, then a partial invoice with the right ones and a final balance one with the wrong ones. The gross totals were correct. My communications with the supplier included them admitting there was a problem, but they couldn't seem to create a piece of paper with the right numbers on it!
Don't do it
I believe your responsibility is to pay the bill and process the invoice correctly. By pushing it as far as you have, you now have 3 invoices and have to decide which one to use. Imagine how much more complicated it could get by reporting them. They are supposed to be professionals and, however tempting it is, it is not your job to educate them (unless they ask for help, of course).
Materiality?
As I've already said the VAT in our case is negligible, but potentially on 2% of £19million I consider that to be material.
1/6 of 2% is 0.33%. Wasn't material when I was an auditor in short pants.
Is this
As I've already said the VAT in our case is negligible, but potentially on 2% of £19million I consider that to be material.
1/6 of 2% is 0.33%. Wasn't material when I was an auditor in short pants.
a ghost I'm seeing? :)
Just a last whiff of ectoplasm
As I've already said the VAT in our case is negligible, but potentially on 2% of £19million I consider that to be material.
1/6 of 2% is 0.33%. Wasn't material when I was an auditor in short pants.
a ghost I'm seeing? :)