Can't get copy invoices - VAT lost?

Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 🎆 🐘 🎆
What would you do in this situation?

New client, outstanding tax and VAT returns.

In bringing the record up to date, there are a lot of missing invoices from a main supplier, on which there are several thousand pounds of VAT. Having phoned the supplier to see if I can get copy invoices, I am told that due to a falling out, they likely wouldn't co-operate and therefore I am unlikely ever to get VAT invoices for these purchases.

I don't see any choice but to record those purchases as gross, not reclaim the VAT, have higher VAT bills as a result, and the client simply attract tax relief on the VAT paid on his self assessment return.

Any thoughts?


  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 🎆 🐘 🎆
    I know this is a really stupid question, by the way! And I know I know the answer, but it's one of those "just reassure me, please" moments! :lol:
  • PeteLC
    PeteLC Registered Posts: 56 💫 🐯 💫
    Personally I would record them as gross!

    If there is a VAT inspection and no invoices produced they will be forced to pay the VAT back anyway.
  • Bowdent
    Bowdent Registered Posts: 22 Dedicated contributor 🌟 🐵 🌟
    Without those invoices you can't really claim it back unfortunately.

    If I were in your shoes, I'd calculate what I thought the VAT element would be (by looking at supplier statements or payments made etc) and let your client know how much VAT you think is involved. They then have a choice - either take the hit, or make contact with the supplier to try and resolve the 'falling out' and get copies of the missing invoices.

    Good luck!
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 🎆 🐘 🎆
    Thanks. See I knew that was the answer. Oh the joys of being a sole practitioner again and second guessing myself. Wouldn't go back into partnership but sometimes it has its uses when one has a mad moment.

    Thanks both :D
  • Marcus Smyth Accounts
    Marcus Smyth Accounts Registered Posts: 10 Regular contributor ⭐ 😼 ⭐
    I can see you have the answer, but I was going to say exactly the same thing.

    Work out the VAT involved and then let your client know how much is involved and that you can't claim this amount without copies of the VAT invoices.

    It will then be up to the client to see if he can get copies of the invoices or not.

    Good luck!!
  • groundy
    groundy Registered Posts: 495
    I disagree slightly, in that I would reclaim the VAT. If it is a supplier were you have seen some invoices and are certain that they are VAT registered, I would reclaim the VAT. If an inspection followed, I would explain to the inspector that the supplier was unhelpful in supplying duplicate invoices.

    The only time I would include as gross is if I could not be certain that the supplier is VAT registered. I know this is incorrect if you follow the letter of the law, but having dealt with a few VAT inspectors recently I can't see it being a problem.
  • Bowdent
    Bowdent Registered Posts: 22 Dedicated contributor 🌟 🐵 🌟
    I havent had too much experience with inspectors, but I'd certainly be cautious with that approach.

    Perhaps if you went down the route of reclaiming without the invoices, talk your client through the proposal and have it in writing what you discussed before doing it. You certainly don't want a situation whereby you reclaim only for the inspector to disallow it and your client be left with a large vat adjustment to pay.
  • Marcus Smyth Accounts
    Marcus Smyth Accounts Registered Posts: 10 Regular contributor ⭐ 😼 ⭐
    I would be very cautious about simply re-claiming VAT without copies of the invoices. It may be that there are some nice VAT inspectors, but I am sure not all would view this as okay. I would still try and get your client to build bridges and get copies of the invoices.

    This is off the HMRC website :

    You need a valid VAT invoice to reclaim VAT
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 🎆 🐘 🎆
    Thanks all.

    Logic says that I know there is definitely VAT on the invoices, therefore they should be entitled to reclaim.

    I do not believe bridge building to get the copy invoices is a possibility (I'll ask the client but don't think it's possible).

    Under the old penalty regime there was more scope for doing as groundy suggsts but under the new regime, I would suggest putting the VAT through was a deliberate error. Even though they have paid the VAT out, by not holding the VAT invoices, strictly speaking they cannot reclaim the VAT.

    I suppose the middle ground would be to advise the client that were he to be inspected there is the possibility of being made to pay back the VAT that has no invoice plus penalties of up to 100% and it is up to him whether he chooses to claim it or not.

    There is also the fly in the ointment that the falling out may have revolved around unpaid invoices and therefore I cannot be sure if all the missing invoices are paid, and therefore not all the VAT would be reclaimable in any case even with copy invoices.

    I think it's safer to lose it on this occasion.

    Edit: Duh, the missing invoices are matched to cheques so those were definitely paid. It's other invoices that weren't. So yeah, middle ground still a possibility with a written warning to client.

    Edit 2: He does have a valid VAT invoice. He just can't find it! Technically that is correct......! :lol:
  • deanshepherd
    deanshepherd Registered Posts: 1,809
    I'm with groundy on this one. Just explain to the client that a later inspection may result in the VAT being disallowed.
  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 🎆 🐘 🎆
    Thanks Dean. I've decided to put it to the client and leave it up to him.
  • Paul C
    Paul C Registered Posts: 193 🎆 🐘 🎆
    What about the client paying an "admin fee" to the supplier for the costs involved in producing copy vat invoices?
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