VAT Payment

VAT Payment

Didn't find your answer?

Hi All,

We have made an admin error when paying VAT on behalf of our client(Client-A).  Mistakenly, we've used the Client-B's VAT number as a reference and also settled Client-B as normal.  Understand the payment will be allocated against the incorrect VAT(correct as per what we've put as ref). HMRC website doesn't have anything to correct this situation.  How do we go about correcting this silly but grave error on our part and is it ethical to keep client under all communication/developments.  Keen to know what others have done to fix such error - appreciate your advice please!


Replies (3)

Please login or register to join the discussion.

Euan's picture
By Euan MacLennan
03rd Jun 2013 13:49

Clear as mud!

I would have thought that most VAT these days is paid by automatic Direct Debit following submission of the client's VAT return.  You set up the VAT DD only once for each client and then, submission of Co. A's VAT return will trigger Co. A's bank account being debited.

However, that obviously does not apply in your case.  I assume that you are not saying that you have access to Co. B's bank account and are authorised to make payments on Co. B's behalf or that you are so flush with money that you make the payments on your own bank account for subsequent recharge to the client.  That leaves only the generic HMRC DD, used typically to pay PAYE, but can be used for VAT and other taxes.  Are you saying that you logged on as Co. B and proceeded to pay Co. A's VAT liability using the DD on Co. B's bank account?

I don't know what you mean by "is it ethical to keep client under all communication/developments", but the simplest method of rectifying your mistake would be to ask Co. A to make an immediate transfer into Co. B's bank account of Co. A's VAT liability or in order to maintain Co. B's confidentiality, to transfer the money into your own bank account for onward transmission to Co. B.  Obviously, this would require you to come clean with both companies.

To avoid the problem in future, set up the separate DD within the VAT return system.

Thanks (1)
Replying to Pirate0:
Accountants & Business Advisers
By Gladstone
03rd Jun 2013 15:45


Thanks Euan!.  I was intending to know that in my situation do I let my Client know that his has happened.  I don't want to scare them as they've already provided the funds to pay on behalf of them but equally I don't want to keep them out of the loop until it is corrected by HMRC.  Have spoken to HMRC today who suggested to write a letter to Accounts Adj Team in Liverpool explaining the situation and it will be allocated correctly.



Thanks (0)
By Gilly
03rd Jun 2013 15:08

Contact HMRC

A payment needs to be made to HMRC with the correct VAT reference number, before the payment deadline to avoid surcharge notices and penalties being sent to client A. If client A's VAT liability is paid on time, you've met your obligation to them so they may not need to know.  Then you need to request a refund of the incorrect payment from HMRC.  Phone HMRC giving client B's details, they will be able to see that client B's payment exceeds their box 5 figure.  Don't expect to receive the refund quick enough to pay client A's liability.  Contact client B, as HMRC will most likely refund the money to their bank account (or whichever account is set up on client B's VAT record).   The DD option makes things much simpler.

Thanks (1)