VAT exemption / exposure question
Discussion
Supposing a company is charging VAT to its clients, these clients being individuals who can't claim it back. The company concerned has previously had a ruling by the C&E that they should be charging VAT, however a client claims that C&E have got it wrong (and indeed they might have) - how exposed is the company if it turns out they have been charging VAT over the years but (possibly) shouldn't have been. Could previous clients make a claim against the company for wrongly charging VAT, or would the claim be against C&E, or could there be no claim? Also, because there's been a C&E ruling does that put the company in the clear?
Did you get a written ruling from the VAT office or was it just verbal?
The VAT Office will not stand by any advice they give verbally.
However, if you have collected VAT from your customers incorrectly and then paid it over to HMCE, you could attempt to recover it from the VAT authorities. However, there are some limits to how far this can be done.
The VAT people will not go back further than three years.
They will not refund VAT to you if they feel there is the possibility of "unjust enrichment" i.e. you get the VAT back from them but fail to refund it to your customers.
A number of years ago Brussels ruled that the UK VAT rules on VAT on eye tests were incorrect and that HMCE had collected VAT when they shouldn't have. Unfortunately, HMCE were allowed keep this illegally collected tax as there was no mechanism whereby it could have been refunded to the customers who had paid it over to opticians over many years.
This is a genuine case wher tax authorities can literally be allowed to steal money from citizens but then be allowed keep the proceeds of their crime.
The VAT Office will not stand by any advice they give verbally.
However, if you have collected VAT from your customers incorrectly and then paid it over to HMCE, you could attempt to recover it from the VAT authorities. However, there are some limits to how far this can be done.
The VAT people will not go back further than three years.
They will not refund VAT to you if they feel there is the possibility of "unjust enrichment" i.e. you get the VAT back from them but fail to refund it to your customers.
A number of years ago Brussels ruled that the UK VAT rules on VAT on eye tests were incorrect and that HMCE had collected VAT when they shouldn't have. Unfortunately, HMCE were allowed keep this illegally collected tax as there was no mechanism whereby it could have been refunded to the customers who had paid it over to opticians over many years.
This is a genuine case wher tax authorities can literally be allowed to steal money from citizens but then be allowed keep the proceeds of their crime.
Edited by Eric Mc on Wednesday 9th August 10:44
Cheers Eric. The IR steal from me every month/quarter/year - blood sucking leaches they are!! Anyway, there was a written ruling C&E, but it was a little ambiguous looking at it now! My auditors are being totally unambiguous and are saying "there's definitely no problem stick to the original ruling". Meanwhile, a VAT consultant is saying that he's 100% certain that C&E have got it wrong, and he's pointed it out to me in the VAT bible!! Hence the dilemma.
Eric Mc said:
Did you get a written ruling from the VAT office or was it just verbal?
The VAT Office will not stand by any advice they give verbally.
However, if you have collected VAT from your customers incorrectly and then paid it over to HMCE, you could attempt to recover it from the VAT authorities. However, there are some limits to how far this can be done.
The VAT people will not go back further than three years.
They will not refund VAT to you if they feel there is the possibility of "unjust enrichment" i.e. you get the VAT back from them but fail to refund it to your customers.
A number of years ago Brussels ruled that the UK VAT rules on VAT on eye tests were incorrect and that HMCE had collected VAT when they shouldn't have. Unfortunately, HMCE were allowed keep this illegally collected tax as there was no mechanism whereby it could have been refunded to the customers who had paid it over to opticians over many years.
This is a genuine case wher tax authorities can literally be allowed to steal money from citizens but then be allowed keep the proceeds of their crime.
The VAT Office will not stand by any advice they give verbally.
However, if you have collected VAT from your customers incorrectly and then paid it over to HMCE, you could attempt to recover it from the VAT authorities. However, there are some limits to how far this can be done.
The VAT people will not go back further than three years.
They will not refund VAT to you if they feel there is the possibility of "unjust enrichment" i.e. you get the VAT back from them but fail to refund it to your customers.
A number of years ago Brussels ruled that the UK VAT rules on VAT on eye tests were incorrect and that HMCE had collected VAT when they shouldn't have. Unfortunately, HMCE were allowed keep this illegally collected tax as there was no mechanism whereby it could have been refunded to the customers who had paid it over to opticians over many years.
This is a genuine case wher tax authorities can literally be allowed to steal money from citizens but then be allowed keep the proceeds of their crime.
Edited by Eric Mc on Wednesday 9th August 10:44
In Srebbe's case though surely the customers can be identified? Plus you'll be aware of the issues surrounding the 3yr cap at present, and the recent case regarding unjust enrichment which found in favour of the taxpayer.
Srebbe, what did the contract say - was the contract price specifically inclusive or exclusive of VAT i.e. did the customers know they were being charged VAT?
stumartin said:
Eric Mc said:
Did you get a written ruling from the VAT office or was it just verbal?
The VAT Office will not stand by any advice they give verbally.
However, if you have collected VAT from your customers incorrectly and then paid it over to HMCE, you could attempt to recover it from the VAT authorities. However, there are some limits to how far this can be done.
The VAT people will not go back further than three years.
They will not refund VAT to you if they feel there is the possibility of "unjust enrichment" i.e. you get the VAT back from them but fail to refund it to your customers.
A number of years ago Brussels ruled that the UK VAT rules on VAT on eye tests were incorrect and that HMCE had collected VAT when they shouldn't have. Unfortunately, HMCE were allowed keep this illegally collected tax as there was no mechanism whereby it could have been refunded to the customers who had paid it over to opticians over many years.
This is a genuine case wher tax authorities can literally be allowed to steal money from citizens but then be allowed keep the proceeds of their crime.
The VAT Office will not stand by any advice they give verbally.
However, if you have collected VAT from your customers incorrectly and then paid it over to HMCE, you could attempt to recover it from the VAT authorities. However, there are some limits to how far this can be done.
The VAT people will not go back further than three years.
They will not refund VAT to you if they feel there is the possibility of "unjust enrichment" i.e. you get the VAT back from them but fail to refund it to your customers.
A number of years ago Brussels ruled that the UK VAT rules on VAT on eye tests were incorrect and that HMCE had collected VAT when they shouldn't have. Unfortunately, HMCE were allowed keep this illegally collected tax as there was no mechanism whereby it could have been refunded to the customers who had paid it over to opticians over many years.
This is a genuine case wher tax authorities can literally be allowed to steal money from citizens but then be allowed keep the proceeds of their crime.
Edited by Eric Mc on Wednesday 9th August 10:44
In Srebbe's case though surely the customers can be identified? Plus you'll be aware of the issues surrounding the 3yr cap at present, and the recent case regarding unjust enrichment which found in favour of the taxpayer.
Srebbe, what did the contract say - was the contract price specifically inclusive or exclusive of VAT i.e. did the customers know they were being charged VAT?
The contract specified that it includes VAT - so they all knew.
Quite right Stu - nothing remains frozen in the tax world. There is certainly no harm in Srebbe making his case. All I was doing was pointing out the types of arguments HMRC might try. I wasn't suggesting that they would be right - or that they would win those arguments.
Edited by Eric Mc on Wednesday 9th August 11:31
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