VAT Reclaimed

VAT Reclaimed

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A client agreed to have some work done by a supplier.  The supplier billed them in advance and they claimed the VAT back on the purchase invoice (invoice accounting).

The work was never completed and we have now discovered that the supplier has gone into liquidation, so the work will never be done.  They haven't paid the invoice, so I'm presuming they'll show up as a debtor at the liquidators.  The liquidators haven't been in touch.

I'm presuming that we should write this invoice off and repay the VAT claimed.  Are we ok to do this unilaterally, without a credit note etc.  Or should we in fact be doing it at all - we have no idea if the supllier paid over the output VAT before going into liquidation

Replies (2)

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By Democratus
17th Sep 2012 14:45

Issue a PL Debit Note

Why wait for a Credit Note just issue a Debit Note on the PL and offset. You haven't stated if your client has paid anything to the supplier so this should work.

Not your concern if the supplier has paid tjeir Output VAT. Your client will have reclaimed the Input VAT, paid nothing to supplier and on next return revers the claimed Input VAT.

 

That is if your client wants to tidy up their ledger pretty quickly. The alternative is to wait for the liquidator to get in touch, but since no actual work was done they will have a hard time getting a payment. They will need to tidy up the VAT though.

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By Cloudcounter
17th Sep 2012 17:02

How old

is the invoice?

 

If it's more than six months old, then your client must repay the input tax irrespective of any other factors.  HMRC Manual

 

 

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