I have a client with the following situation: the company offers psychotherapist services and is VAT registered (sadly psychotherapists are not VAT exempt). The company sees patients that pay through insurance. So the company registers sale of say £100 and vat due £20, and raise an invoice for the insurance company for £120.
The insurance company refuses to pay the VAT element of the company's invoice, referring to the fact that insurance is a VAT exempt business. Does this mean that the psychotherapist company is set to pay VAT on that invoice as they can't reimburse it off the insurance company?
I would be grateful for the opinions and references on further reading.