Solicitors VAT demand

[Cogcog]

Last year I had a long running Employment Tribunal (ET) which thankfully was covered by insurance. However, the solicitors appointed by the insurers required me to pay the VAT on their charges and then reclaim it. I did that throughout 2009. The ET claim ended in Feb 2010 and I emailed the solicitor twice asking for a final settlemnet on the bill by 31/3 as I was switching to the flat rate VAT scheme in May. I held off switching to the falt rate scheme expecting this bill.I heard nothing after a few chases so assumed that as the claim had settled the insurers had sorted it.

Today I got their snotty letter asking why I hadn't paid the VAT with a copy invoice for £550 dated 28/8.

My problem is that because of their tardiness in asking for the VAT money I am not able to directly reclaim this VAT on the flat rate scheme so the £550 will now come straight out of the company when we could have reclaimed it in March had their sent the invoice when I requested it (twice).

I am minded to send them copy emails and suggest they send the invoice to the insurers or suck it up themselves but I recognise that the liability as far as HMRC are concerned may remain with my business.

Any suggestions? If I have to pay is it now accountable as a business cost?

[Cogcog]

coyft said:

Cogcog said:

I recognise that the liability as far as HMRC are concerned may remain with my business.

The VAT liability as far as HMRC is concerned lies with the provider of the goods or services not the receiver. Think I would give HMRC a call and ask them if you are able to recover the VAT, because it relates to a service you received before you joined the flat rate scheme.

Good cal, HMRC say I can claim it back as long as I have a paper trail showinmg when the work was carried out.

Edited by Cogcog on Friday 1st October 08:53

[Eric Mc]

Whatrver about the recoverability of the VAT, you must still pay the solicitors the full VAT inclusive value of their fee.

[insurance_jon]

I think what has happened eric is that although it was insured an insurer will pay the cost of the claim, but they don't pay the VAT if you are VAT registered as you can claim it back and insurance companies can't.

His issue is the solicitors lateness of billing

[Eric Mc]

He still has to pay it.

I think HMRC would be sympathetic to a valid Input VAT reclaim based on the fact that the cost appears to have been fully incurred prior to opting for the FLat Rate Scheme.

(Flat Rate causes its own set of problems).