Builder vat fraud

leveller2911

00ec25 wrote: »

leveller2911 wrote: »

of course you do then run the risk that someone else will quote ex VAT and joe public will miss this caveat and merely see a significantly cheaper price...[/QUOTE]


Think youve raised a good point

I rarely do work for developers or builders as they have a nasty habit of going pop and not paying up.The vast majority of my work is for Joe public, been VAT registered for nearly 8ys and TBH Ive never had a problem with quoting +vat.....

jimbo88_2

Premier wrote: »

A builder, or anyone else, cannot add VAT to their bill unless they are VAT registered.

What I don't understand is that the OP is reluctant to report this person who is stealing not only their but my money (in the form of tax evasion), or why they agreed to make cheques out to someone other than the tradesman/company. Why even bother checking up on the status of the VAT registration if they are not prepared to report the matter now they find he isn't VAT registered?

I forgot to say that making the cheque out to his gf is not as "clear" as you make it sound. This is because, as an example: The company are called "S&S Builders". The builder is called A.Smith and we made a cheque out to a B.Saunders, so you can see that this "could" look perfectly normal? It's not like we made a cheque out to someone totally random sounding! Which is why, we did not know the person we made the cheque out to was his gf. (until a later stage when he disclosed her name, possibly without realising, I don't know)....

jimbo88_2

UPDATE: We emailed the builder with our concern regarding the invalid vat number along with other questions we had....but had a reply from him about the vat.

He explained that he had another company called XXX which ceased trading and he has" transferred" his vat number to his current business XXX. He doesn't know why hmrc don't have a record of him being registered but he said he will contact hmrc to see if there is a problem, and ends on the note that he has done everything legally and above board!...

Firstly, is it possible to transfer a vat number?
Secondly, is it possible to transfer a vat from a bankrupt business?

As I think not....

leveller2911

Sounds very dodgy to me.I find it hard to believe that HMRC find it acceptable to transfer a VAT number,especially from a bankrupt company.I hope more informed poster will clarify as Its an interesting point.I thought a VAT reg number was an identity to a particular business/company not a person.......

brightonman123

i would ask for his VAT registration (if any exist?), 'to log with my accountant' etc,

or just come out straight with it- we know you're using invalid VAT number etc, so will take off that part from final (stage?) payment..

make sure work gets done first though!

when all sorted, then dob in to income tax man- cheating them as well, it seems, if getting payments to someone else..?

JasonLVC

jimbo88 wrote: »

UPDATE: We emailed the builder with our concern regarding the invalid vat number along with other questions we had....but had a reply from him about the vat.

He explained that he had another company called XXX which ceased trading and he has" transferred" his vat number to his current business XXX. He doesn't know why hmrc don't have a record of him being registered but he said he will contact hmrc to see if there is a problem, and ends on the note that he has done everything legally and above board!...

Firstly, is it possible to transfer a vat number?
Secondly, is it possible to transfer a vat from a bankrupt business?

As I think not....

It is possible to request HMRC transfer a VAT number from one company to another but when transferring the number, the new owner of that number takes on any debt/liability of the previous owner of that number and so it is very rare for you to see VAT numbers transfer.

If the previous business was bankrupt, it will likely have owed £££ to HMRC and so only an idiot would transfer a VAT debt from a Ltd Co into a new one!.

JasonLVC

http://ec.europa.eu/taxation_customs/vies/vieshome.do

This is a 'live' database of all EU VAT numbers including the UK.

Type the number in and if it is valid it will confirm that the number is valid. What it will not do is confirm if that number belongs to this builder (ie, he could easily give you the VAT number for Argos which is of course, valid, but not his!)

If number shows up on this website as valid, then enquire with HMRC one more and ask if XYZ Ltd has this VAT number. If not, refuse to pay ANY VAT as the trader is NOT VAT registered.

If number shows as invalid on this website, then no such business or number exists in the EU/UK. This means the number is either 'dead' or never existed.

HMRC do not get something as fundamental as this wrong.

The builder may be using his old VAT number (a fairly common trick as it looks legit until you check it and people rarely do) which is no longer valid.

You could always ask him for a copy of his VAT Cerificate which proves that XYZ Ltd has 12345678 VAT registration number. Nothing wrong in asking.

If you have a contract with XYZ Ltd then your payment should be to XYZ Ltd. If you have a contract with Mr Smith (sole trader) then your cheque should be made to Mr Smith. Any other name and the income for that job is NOT going through the proper accounts of the business. This is called suppression of takings and means the VAT will not be declared (how can it, the VAT has been paid to someone else/another entity).

(I'm a tax bod by the way, I normally frequent the business forums helping out on VAT and tax matters)

JasonLVC

leveller2911 wrote: »

Sounds very dodgy to me.I find it hard to believe that HMRC find it acceptable to transfer a VAT number,especially from a bankrupt company.I hope more informed poster will clarify as Its an interesting point.I thought a VAT reg number was an identity to a particular business/company not a person.......

The only time it makes sense to transfer is if you are a sole trader and you convert to a Ltd Co. A sole trader is a legal entity, as is a Ltd Co and so you have to transfer your VAT number from one entity to another or you can start afresh with a new one.

You are right, it is the legal entity that is VAT registered so a sole trader who say runs a cafe and a plumbing business would have one VAT number to cover both trades unless he converts one into a Ltd Co, whereupon he can then have two VAT numbers (one sole trader/one Ltd Co).

leveller2911

Fountain of knowledge you are Jason......Cheers for clarifying that.....

leveller2911

Jason,If the builder is LTD will it show up at Companies House with a VAT number?? If he went bankrupt previously is it possible to check the details of the previous company to check the VAT reg number for that comp?..

If he did go bust before he can't be a director of the new ltd comp for 6 yrs (If Im right)....