VAT evidence to reclaim input tax

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT member discussion
Dear all

Has any one had a problem with a client trying to reclaim input VAT on invoices not made out to them?

I have a client who has undertaken a considerable amount of restoration work to a B&B. The builder doing the work for him was not VAT registered however he 'kindly' gave the invoices made out to him for materials installed, to my client to pay directly to the materials supplier and then for my client to keep the 'VAT' invoice to claim back the input VAT. Which of course he did.

VAT Notice just says that invoices must be kept for supplies received into a business, which he did, sort of (19.7.1) :?:

Julia

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:VAT evidence to reclaim input tax

    I have had odd ones of these. For instance is a sub-contractor buys materials for a main contractor and then gets paid for the materials later, giving the contractor the invoice. I have never seen this as a problem.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:VAT evidence to reclaim input tax

    TC

    I hear what you say regarding the CIS scheme however this is clearly a situation of a builder trying to keep his turnover under the VAT threashold and not registering.

    In my clients records for example there are half a doxen invoices from PTS made out to the builder on his trade account that my client paid PTS directly for and then the builders invoice for labour only.

    J
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:VAT evidence to reclaim input tax

    This is an awkward one because the builder could argue that the materials were only booked on his account so that the customer got a better deal. If the customer actually went in and paid for the goods himself, then these receipts belong to the customer. The builder can not claim VAT back if the customer has "taken over" the receipts. Well that is how I would see it anyway. What do you think?
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:VAT evidence to reclaim input tax

    I always thought that a business could only claim back input tax if the relevant invoice was addressed to that business, or to an individual associated with that business. In section 16.3.1 of notice 700 it says the invoice should be addressed to the customer, and I would have thought the customer is the (only) entity entitled to claim input tax.

    If the end user agreed to pay for the materials so that he can claim the input VAT, he/she should have dealt directly with the supplier.

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:VAT evidence to reclaim input tax

    Although the builder orders the supplies through his own trade account - presumably having negotiated beneficial discounts not available to his own customer (i.e. the end contractor) - wouldn't it be better in the future for him to just ask for the invoice to be made out directly to the end contractor rather than to himself? Most suppliers I know are quite happy to do this as long as someone pays them and it will still appear under the builder's trade account until settled.

    1) The supplier still gets the business no matter who pays
    2) The builder can still keep his turnover down ('sidestepping' the VAT registration principles)
    3) The end contractor gets legitimate VAT invoices to reclaim the input tax

    This is only tenuously related, but in one of my previous companies there were occasional (but not particularly worthwhile) customers who always 'free-issued' their own materials to stop us charging a profit on materials supplied by ourselves thus allowing us to profit on our labour only. Tight sods.

    Regards,

    Robert
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:VAT evidence to reclaim input tax

    You can lead a builder to water but you can't always make him drink..


    :D
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:VAT evidence to reclaim input tax

    When I rule the world :shock: :shock:

    ALL receipts will automatically have a VAT number and the VAT amount on them. Dates and invoice numbers will have to (by law) be in exactly the same place on every invoice :lol:

    It drives me mad when, particularly at Sainsburys, I end up with 3 pieces of paper just to buy some diesel.

    Jumping onto another thread slightly..... but just my meglomaniac views.

    Claudia

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