I work for a company which manages property on behalf of a landlord, and he has asked us to use our own VAT number on the invoices we send to the tenants for service charges. The landlord's company is registered offshore and therefore can't charge or reclaim VAT. Up until now the service charges have been raised by another of the landlord's companies, which was registered in the UK, but this company will cease to exist soon, which is why he wants us to start using our VAT number.
This would mean we would have to incorporate the figures relating to his property into our own VAT returns and then he would have to pay us his part of what is owed to HMRC.
We don't want to do this, and I'm hoping someone can point me in the direction of an answer as to whether it would be legal/allowable under HMRC rules.
I could be misreading the arrangement here but I think that the question here is whether your company should already have been charging VAT.
You are providing an intermediary service which if your turover is £70k or above (or likely to go over £70k in the next month) then you should be charging VAT.
If the landlord is VAT registered then relative proportion of the VAT will be passed on to him to pass to HMRC. If not then it is yourselves that need to pass it to HMRC.
Up until now you state that VAT has been handled through an intermediary company. I don't want to get bogged down in that arrangement but surely that must mean that your company charges VAT then the UK intermediary company was paid inclusive of VAT by yourselves.
If the intermediary is taken out of the equation and you are left with a non VAT registered individual then you don't pass the VAT on to them. You pay it directly to HMRC. Simples.
Sounds to me as though you need to get your accountant involved in this one Eunice possibly even to talk to the client directly as it sounds as though the client may tie you up in circles and you could end up landed with the VAT bill as you are the one collecting it.
The above answer assumes that you are providing a full agency service for your client.
Well done for spotting that something was amiss here. You may have just saved yourself a lot of money and grief.
All the best,
Shaun.
kind regards,
Shaun.
__________________
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.
Not sure I've explained this properly, I'll try again ...
Our company (Company A) raises invoices to the tenants on behalf of the landlord (Company B), using Company B's VAT number. We also pay for the maintenance of the property and the supplier's invoices are addressed to Company B C/O Company A. The figures are reported on Company B's VAT return.
Company B will soon no longer exist, and the landlord has asked us to start issuing invoices to the tenant with our VAT number on, have the supplier invoices addressed to us (Company A) and incorporate both of these outputs and inputs into Company A's VAT return. Company B will then re-imburse company A with the net VAT payable by Company B.
I'm really hoping someone can point me in the direction of something to tell the Client we can't do it, as I really don't want to have to have all of these other entries on our VAT return and I don't want to set a precedent, if we had more than one Client which wanted us to this it would quickly become unmanageable.
My first response stands. The way that you are doing it you are jointly and severly liable for the VAT of the third party.
It is not up to the third party to give you money back. It is down to you to not give it to them in the first place.
In your example, you are registered for VAT, your client is not registered for VAT, you invoice the clients not your client so you are responsible for the VAT.
I don't think that I can emphasise strongly enough. If the VAT number on the invoice is yours then you are acting as the principle.
My advice is to get your accountant involved in this at your earliest convenience.
Here's a bit of light reading material about non established taxable persons :
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.
LOL as soon as i read the words *offshore* and *V.A.T* i heard alarm bells, i think i've been reading too many crime novels, better get my study books out instead.
-- Edited by Spamkebab on Wednesday 30th of March 2011 12:56:44 PM
