Reclaiming VAT on a Retrospective Basis

[LMT8]

One of our clients applied for voluntary VAT registration on a retrospective basis, which was backdated to 01/01/04 (he did this to claim back input VAT on the purchase of a van). This was accepted by HM Customs & Excise and a certificate issued from 01/01/04.

Due to a change of ownership in our client’s contractor, the new owner is only willing to make payments of VAT from 01/07/04 (the date they assumed ownership). As things stand, our client will now have to meet the VAT in the earlier period (01/01/04 – 30/06/04) from his own pocket. HM Customs and Excise will not allow our client to amend his registration date and any de-registration will only be effective from the date such application is made.

Does anyone know of any way out of this situation?

[paultaylor@vatease.c]

Your only possible solution is to seek to recover the VAT from the contractor. There is no other way to mitigate this VAT.

Does your client have a contract for services? You should check the contract as to whether it specifies the price quoted as VAT Exclusive or VAT inclusive? Unless the price is specifically quoted as VAT exclusive then there is no legal way to force the contractor to pay up the additional VAT.

Regards

Paul Taylor
http://www.vatease.co.uk/