Contract law - think I have been stupid!
Discussion
Hoping I can get some advice here on my probable idiocy in relation to a commercial vehicle transaction.
I have sold a vehicle which was VAT qualifying to a guy who wanted to export the vehicle to Africa. He claimed that he wasn't liable to pay the VAT due on sale price as he was going to export it. He is not VAT registered.
On the advice of HMRC I have charged him the VAT and (stupidly) stated on his invoice that it will be refunded on proof of export and his completion of a relevant form (VAT 410). This is on the basis that I will be able to claim the VAT back due to the vehicle being exported from the EU.
A subsequent call to the same help desk reveals that in fact I cannot claim the VAT back, it is down to him to do so as it was he who took care of the export (he doesn't meet any of the criteria to zero rate the VAT).
At this point the customer has demanded his money back and then hit me with a summons stating that he has provided proof of export so therefore the VAT deposit should be returned to him.
Although both I and HMRC are of the opinion that it is down to my customer to claim the VAT back himself, I think I have probably shot myself in the foot with what I wrote on his invoice, was hoping to just get some confirmation of this from anyone who might know.
Ironically he claims to have emailed me proof of the export but didn't do, the stamped shipping note was included in the summons paperwork but wasn't emailed or posted to me as he stated, so irrespective of the above, I'm thinking he hasn't fulfilled his side of the contract before he launched his claim.
Could anyone advise please?
I have sold a vehicle which was VAT qualifying to a guy who wanted to export the vehicle to Africa. He claimed that he wasn't liable to pay the VAT due on sale price as he was going to export it. He is not VAT registered.
On the advice of HMRC I have charged him the VAT and (stupidly) stated on his invoice that it will be refunded on proof of export and his completion of a relevant form (VAT 410). This is on the basis that I will be able to claim the VAT back due to the vehicle being exported from the EU.
A subsequent call to the same help desk reveals that in fact I cannot claim the VAT back, it is down to him to do so as it was he who took care of the export (he doesn't meet any of the criteria to zero rate the VAT).
At this point the customer has demanded his money back and then hit me with a summons stating that he has provided proof of export so therefore the VAT deposit should be returned to him.
Although both I and HMRC are of the opinion that it is down to my customer to claim the VAT back himself, I think I have probably shot myself in the foot with what I wrote on his invoice, was hoping to just get some confirmation of this from anyone who might know.
Ironically he claims to have emailed me proof of the export but didn't do, the stamped shipping note was included in the summons paperwork but wasn't emailed or posted to me as he stated, so irrespective of the above, I'm thinking he hasn't fulfilled his side of the contract before he launched his claim.
Could anyone advise please?
Be interesting to see what replies you get to this as I had a similar situation recently.
http://www.pistonheads.com/gassing/topic.asp?h=0&a...
http://www.pistonheads.com/gassing/topic.asp?h=0&a...
Even if you are in breach of contract, what is his loss here?
It's not the full amount of the VAT, as he can still claim that back (based on what you say).
It sounds to me as though he is looking to get money back from you - and then claim back the VAT anyway.
He may be able to argue that he's lost the time for the form filling, interest for a payment delay, etc., but he is under a duty to mitigate his loss.
It's not the full amount of the VAT, as he can still claim that back (based on what you say).
It sounds to me as though he is looking to get money back from you - and then claim back the VAT anyway.
He may be able to argue that he's lost the time for the form filling, interest for a payment delay, etc., but he is under a duty to mitigate his loss.
Thanks for replies, Roo, I think Stu R had the regulations correct in your thread:
"If he's UK based, the VAT is no different to any other transaction in the UK - you can't zero rate them. If he then goes on to export the goods outside of the EU, the VAT is for him to process, not you, unless it qualifies as an indirect export as per this link http://customs.hmrc.gov.uk/channelsPortalWebApp/ch... and http://www.businesslink.gov.uk/bdotg/action/detail...
You'd need to be exporting the goods to zero rate / reclaim VAT on them otherwise."
However, does the note that I've put on his invoice mean that no matter that the VAT is due to HMRC, I still need to pay the £460 back to the buyer?*
"If he's UK based, the VAT is no different to any other transaction in the UK - you can't zero rate them. If he then goes on to export the goods outside of the EU, the VAT is for him to process, not you, unless it qualifies as an indirect export as per this link http://customs.hmrc.gov.uk/channelsPortalWebApp/ch... and http://www.businesslink.gov.uk/bdotg/action/detail...
You'd need to be exporting the goods to zero rate / reclaim VAT on them otherwise."
However, does the note that I've put on his invoice mean that no matter that the VAT is due to HMRC, I still need to pay the £460 back to the buyer?*
- Who incidentally would make an eel ashamed at it's lack of talent at being slippery
I don't think the buyer can reclaim the VAT himself because he isn't VAT registered. The VAT should be just his loss. Technically, you can't (legally) refund him the VAT, so on that basis, I'm not sure if the refund bit of contract can be binding. I suspect it could go either way in small claims, whoever puts the best argument likely to win.
Thanks for the suggestions, food for thought.
To paint a more accurate picture, I dont't usually deal in commercials and only had a margin scheme invoice pad to hand, so the exact words I wrote were "+£460 VAT to be returned on proof of export".
Glad I have asked the question here, I was thinking of caving in even though I think morally I am in the right.
To paint a more accurate picture, I dont't usually deal in commercials and only had a margin scheme invoice pad to hand, so the exact words I wrote were "+£460 VAT to be returned on proof of export".
Glad I have asked the question here, I was thinking of caving in even though I think morally I am in the right.
We have cars bought for export regularly.
Firstly; it isn't your problem at all. It is the exporter who claims the VAT back , not you. You haven't sold it VAT free(and so really setting yourself up if there are problems) you have two choices;
Tell him to 'do one' its his problem, or, if he looks like someone who has just made a mistake but needs a bit of help, rather than pulling a fast one on you; Having in mind that people panic when faced with being out of money, rather than actually being nasty.
PM me if you think he's just having a moment and I'll walk you through the process to help him out.
Firstly; it isn't your problem at all. It is the exporter who claims the VAT back , not you. You haven't sold it VAT free(and so really setting yourself up if there are problems) you have two choices;
Tell him to 'do one' its his problem, or, if he looks like someone who has just made a mistake but needs a bit of help, rather than pulling a fast one on you; Having in mind that people panic when faced with being out of money, rather than actually being nasty.
PM me if you think he's just having a moment and I'll walk you through the process to help him out.
speedking31 said:
"returned" is not very ambiguous. HMRC cannot return something that they have not received.
I'm not sure, but isn't that how the import export scam worked which was finally prosecuted last year?A "fake" company was "importing" goods, then claiming VAT back on export - the alleged goods had never entered the country... and had simply been hidden by an elaborate paper trail... often involving goods going in and out several times, and the crims pocketing VAT refunds each time!
Other incidences included.. http://www.yorkshireeveningpost.co.uk/news/latest-...
On another tack, I have had to pay VAT on invoices raised that have not been paid, leaving me out of pocket until settled so HMRC are happy to adopt a similar stance when the boot is on the other foot.
It looks to me as if the wording is such, that the OP simply needs to point out that the proof has to be given to HMRC not himself, and they are responsible for refunding the VAT.
I'd defend the claim, and hold your hands up that you made an error on the Invoice regarding the issue, but point out that upon further research it is in fact HMRC who will provide the refund of the VAT subject to the export paperwork being given to them (and any associated documentation).
speedking31 said:
"returned" is not very ambiguous. HMRC cannot return something that they have not received.
I'm not sure what you mean there - HMRC have received the VAT.If the read the OP, and his other comments, it's clear that he agreed to refund the purchaser himself.
His issue (and the point of the thread) is whether it can be claimed that he can't refund as he can't reclaim the VAT or whether he's made himself liable to refund an amount equal to the VAT regardless of whether he can claim it back or not.
Edited by Deva Link on Saturday 18th May 11:36
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