A customer of mine buys some of his stock via ebay. He is vat registered. Any paperwork I see does not have the sellers vat number on it. Can he claim the vat back on the purchase?
You need to advise him to get a vat invoice from the ebay sellers, of course they may not be vat registered. You can only reclaim input tax if you have a proper vat invoice (with supplier vat number on it).
I take it you mean just this quarters vat rather than going back two years? If he is on cash accounting then you will need to know whether invoices were at 15% or 17.5& and of course whether the invoices paid were vatable in the first place. If on standard accounting for vat then you should be ok with calculating vat. These types of jobs are always messy but as his accountant is involved it should be ok, I would go the extra mile to show the accountant that you are doing a great job since (s)he could become a good source of referrals.
I think this a tricky one for you and I don't want to seem negative but for your own protection you should consider the following.
The rules on what is considered a VAT invoice are quite clear. Any involvement you have in prepairing a return knowing that elements of it are not acceptable may open you up to some form of aiding and abetting.
The problem we all have is that we want to retain clients but we shouldn't allow that to influence our decision, when it means getting involved in a false declaration based on figures you have prepaired. I am pretty sure that regardless of any written objection you have made, it wont be any protection to you if it turns pear shaped. If you are a member of any bookkeeping institution you would probably also be expelled (The ICB cite one case on their website of a member expulsion for putting favourable figures on a return, to help their client)
If it were me personally I wouldn't get involved and depending on the circumstance may consider where I stand on the MLR, VAT fraud etc
In light of your last post I would query the accountants motives for refering him back to you. I would have thought s/he would have made the position clear as well?
The accountant referred him to me as the business was expanding to fast for the previous bookkeeper. The accountant is aware of what is going on and has told him to tidy up on his general business running and paperwork
The customer is well aware of vat implications and admits that he his not very good with paperwork, which is why I am sending him and the accountant my observations so that its on record
you need the client to sign an engagement letter as well.
The client may be under the impression that by hiring a financial professional they are divesting themselves of their responsibilities for the keeping of the financial records. That of course is not the case and the client needs to be made aware of that.
Also make sure that the client knows that you will NOT be processing non VAT invoices as though they were VAT invoices as to do so would be compliant with the crime and as Bill states could see you in as much trouble as the client.
Did you speak with the previous bookkeeper about this client? If so, was growth the real reason for them moving on or was it perhaps that they were too professional to be sucked into the clients error / fraud (The difference between the two of course is one of intent).
If the client is defrauding HMRC then this is tax evasion which a money laundering offense and you are legally obliged to make a report.
Wonder how cavalier about VAT your client is when he suddenly finds all of his bank accounts and credit cards are frozen!
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Just had a thought, assuming you haven't done a MLR assessment yet what risk level would you put him at, low, medium, high? Bearing in mind your responsibility regarding the regs and your current knowledge of the clients mind set.
