OT: are there any VAT experts here? :)

fire away
 
Yep. Go for it. I spent ages getting my head around VAT when I started my business, and I'd be happy to share what I've learned with other people.
 
OK Company 1 buys a VAT chargeable service from Company 2 (pay per click).

Company 2 forgets to charge VAT.

Company 1 saves £200,000 due to Company 2 FAILING to invoice for VAT.

Company 1 gets routine VAT inspection.

Vat Inspection discovers "problem".

What should Company 1 director do:

1: Shoot himself

2: Shoot the director of Company 2, then shoot himself

3: Relax, as it can't be backdated (:D)

This is a real life situ with accurate figures, company 2 is one of the top 3 search engines in the world.

Sleepless nights at the moment.

Gary.
 
I'll ask my wife, she is an accountant tax specialist:thinking:

I'm VAT registered but don't really understand it.
 
I'm not sure company 1 has to do anything, as long as it hasn't been claiming the VAT back that it wasn't paying.
 
We have never and would never claim non paid vat (jail time I believe? :)). Basically big search engine forgot to charge VAT or didn't charge VAT for whatever reason not known to us. A year or two have passed and it's been flagged in an inspection.

What scares me is this situation:


VAT man wants his money

He asks us to PAY

Or he asks SEARCH ENGINE to pay who ask US to pay

Either way, paying would sting.

Gary.
 
EdinburghGary said:
Either way, paying would sting.
Click to expand...
No it wouldn't, because when you entered the item into your accounts, the fact that you had a VAT liability was flagged up, and you put the money aside to pay for it.

Didn't you? :bonk:
 
There is no doubt that the VAT man wants the £200k but it was for company 2 to collect and pay.
 
StewartR said:
No, Company 1 doesn't save £200,000, because Company 1 was going to reclaim the VAT anyway.
Click to expand...

Our vat setup is SUPER complex, hence our 6 month and counting investigation. We are partially exempt from VAT which means we can only offset 10%, a rough guesstimate would be £20K reclaimable from the £200k bill.

And yes the momney has always been in the account, and due to the 3 major search engine providers all having different VAT rules at the time, we had no reason to think what these guys were charging was wrong. They didn't charge VAT and we had nothing to suggest they shopuld be. Only the VAT man has flagged it a year or two after the event.
 
vat man will chase company 2 for not charging vat. Company 2 will then charge company 1 correct vat. Company 1 will then pay vat due to vatman. Vatman might save paperwork and collect monies direct from company 2 and give them slap on wrists. I can't how how the vatman can have a girn at company 1 as they have not been invoiced any vat. It is not up to company 1 to inform company 2 that they should be charging vat(been there)!
 
admirable said:
vat man will chase company 2 for not charging vat. Company 2 will then charge company 1 correct vat. Company 1 will then pay vat due to vatman. Vatman might save paperwork and collect monies direct from company 2 and give them slap on wrists. I can't how how the vatman can have a girn at company 1 as they have not been invoiced any vat. It is not up to company 1 to inform company 2 that they should be charging vat(been there)!
Click to expand...


So we have a potential civil case coming I suppose?
 
Ah, having now read your last post.

If you have not been charged vat for services or goods that you cannot reclaim or can only reclaim 10%, then you are in it methinks. The vat aren't too bad in situations like this. As long as they think there was nothing underhand and there was no intent they will be prepared to do a deal. There is no point in them chasing company 1 for duty due if paying that duty is going to put the company under. In most cases they will only force the issue if they think you've been at it!

Best seek pro advice and sack yer present accountant! lol
 
You can only deal with the vat as it is presented to you in the Company 2 Invoice. If they neglected to include vat then it is they who are firmly in the poo. The vat inspectors will probably now commence a full investigation of their accounts.

Which reminds me - I haven't had a vat inspection for 14 years!!!! ssssshhh.
 
2blue4u said:
You can only deal with the vat as it is presented to you in the Company 2 Invoice. If they neglected to include vat then it is they who are firmly in the poo. The vat inspectors will probably now commence a full investigation of their accounts.

Which reminds me - I haven't had a vat inspection for 14 years!!!! ssssshhh.
Click to expand...



Well *they* might be part of Microsoft soon anyhow - guessing they can deal with this :)
 
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