Started working for a company where the different partners have often put in invoices for the company, with the company name on the invoice, but with their home address on the invoice. Am I right in thinking that to be able to reclaim the VAT, all purchase invoices must have the register company name and address?
Sure I'm right, but you know how it is when challenged and you can't find a notice on the HMRC website that says "it must have registered company name and address..." you start to doubt yourself.
After having a glance, the web pages don't seem to make it absolutely clear but like yourself my understanding has always been that the VAT invoice must contain the VAT registration number, Business name and business address. Not personal address details.
The main thing about this scenario is that the invoices are all correctly going through the books so it's not as though anyone is being a bit naughty and putting work through on the side. I don't believe that there is any attempt at anything untowards going on here and it is just a clerical mistake.
I think that you would be pretty unlucky to get an inspector who would make a big thing out of this but certainly it's a practice that needs to be changed going forwards.
Hope that the links above help a bit. Sure that you will get better answers but for now consider mine agreement with your understanding of matters.
kind regards,
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.
It's an interesting scenario, and as you say Shaun, a bit vague, in some circumstances.
The VAT700 manual says that (excluding the small value receipts) an invoice should be in the persons name , or trading name if they have one. Does this mean it can be either/ or?
The thing is with being VAT registered, it is the entity that is registered, therefore that could be an individual, so if they run several business, they are all liable to VAT, therefore an invoice could in theory be in several different names.
With a partnership, all partners (and there addresses) are listed on the application form when registering for VAT. On the how to register for VAT HMRC webpage, they state
"Each VAT registration covers all the business activities of the registered person."
Unlike LTD company, which is a legal entity in it's own right, a partnership is a group of individuals. While indiviually they are not VAT registered, collectively they are.
I agree with Shaun that as long as there is sufficient evidence of a business activity, it should be OK but better in the long run to avoid ambiguity if they can get the invoices correctly addressed
I just had a read through V1-24A manual's section 5 and the VAT Strategy: Input tax deduction without a valid VAT invoice and agree with the others above, also you must make sure you have taken all steps to avoid these mistakes in the future and also if there are any invoices for higher amounts I would ask the suppliers to reissue those with the correct details, just to make sure.
Although it is aimed at ensuring that a business that wants to claim back the input tax receives a genuine VAT invoice from a bona fide VAT registered supplier (eg not off the back of a lorry, with a dodgy VAT number). It does still refer back to VAT700 for the basics of what must be shown on the invoice. It does however describe some of the processes a VAT inspector can use to make a discretionary judgement.
Just had a quick scan of the VAT Regs 1995 and it basically repeats what should be shown on the invoice.
Hi Bill, Yes it really is about what you said but thinking on that line if HMRC does not accept the home address that would mean it is not a valid VAT invoice - or would it? Actually it is still a valid VAT invoice just not for the entity concerned? No that's not right it is issued to the named entity just not for the right address...ok going back to the beginning if any of the criteria of a VAT invoice is not met would mean it is not a valid VAT invoice. The logical thinking did not work, hmm I shall stop thinking. Anyway (opinion) unless the amount on invoice is unusual for the nature of business concerned I don't think any inspector would have major problems BUT you never know. Probably Shaun is right about it being a clerical mistake but than again if it is regular and is/was happening for long time than it is a bit bigger mistake and in an ideal world someone should have picked up on it before.
Thanks for your comments. I'm pleased I'm not the only one who found this a bit confusing. Most reassuring!
I'm making sure they keep supplementary information (letters of engagement etc...) confirming business activity. So shouldn't be a problem with past invoices. Just persuading them to follow this procedure going forward is a little tricky. It seems to be a question of control and trust. But we'll build that up over time!
The logical thinking did not work, hmm I shall stop thinking. Anyway (opinion) unless the amount on invoice is unusual for the nature of business concerned I don't think any inspector would have major problems BUT you never know. Probably Shaun is right about it being a clerical mistake but than again if it is regular and is/was happening for long time than it is a bit bigger mistake and in an ideal world someone should have picked up on it before.
