Supplier will be VAT Registered in a few months

riggit

Hello there,

We are VAT registered and have a possible supplier, who initially appeared to charge VAT.

We haven't bought anything from them yet, but were about to until we realised they were not actually VAT registered.

They say they are going to get registered for VAT in a few months and can issue a VAT invoice to us then.

Is this permissible, assuming that they did actually become registered?

Help appreciated.

Regards

anniecave

Sounds a bit dodgy to me.

It's at the point in time when the goods or services are actually provided where VAT is payable or not.

So if they are not VAT registered then they can't charge VAT. Simple.

If you are just buying goods from them, then if they are registered for VAT at the time of sale, they should charge VAT, if they are not registered, they shouldn't be charging VAT.

If they will be providing services to you then it will depend on the payment schedule agreed between you but the basic principles are the same, if they are VAT registered at the time they issue invoices to you, or at the time that you pay them, then they should charge VAT, if not, then not.

If they are saying that they can sell you something today and tell you that the price includes VAT, but they haven't registered for VAT and don't intend to do so before the point of sale, then they are either not understanding how VAT works or they are doing something dodgy.

If in doubt, agree a price excluding any VAT. Then they will either give you an invoice not including VAT, and you pay them this, or they give you a VAT invoice then you can check out whether the VAT number is actually registered to them or not, before making payment.

antonic

A supplier can only display and charge VAT if they are VAT registered, if they are not they are committing a fraud and if you accept a VAT invoice KNOWING this to be the case then you *could* end being investigated by a VAT Assurance Officer and receiving either a Civil Penalty or Officers Assessment (or both) to recover the VAT you have claimed back incorrectly.

Invoices issued by business`s and used to claim back VAT are checked by HMRC.

riggit wrote: »

Hello there,

We are VAT registered and have a possible supplier, who initially appeared to charge VAT.

We haven't bought anything from them yet, but were about to until we realised they were not actually VAT registered.

They say they are going to get registered for VAT in a few months and can issue a VAT invoice to us then.

Is this permissible, assuming that they did actually become registered?

Help appreciated.

Regards

chrismac1

http://www.hmrc.gov.uk/vat/start/register/waiting.htm

Sadly they may well be correct. This is due to the bonkers world of HMRC. You might think they'd grab the chance to issue a VAT number at 100 miles an hour, after all 90% of businesses registering are going to be a cash cow for the country. But no, that would be way too easy - maybe this is an international fraudster hell bent on swiping thousands. Never mind the fact that only a fraudulent VAT return generates the cash flow from the country to the fraudster, not the registration. We must perform as many jobsworthy checks as possible before issuing the number.

Meantime the business has to ask for VAT without having a number. Never mind the inconvenience, never mind the hassle, never mind if customers think the business is trying it on - we're not here to help small businesses just stuff them full of red tape.

If I sound bitter, it is because a car dealer client had a near miss. He rang them in August 2010 to register. Luckily he listened to my words of warning about HMRC and took the name, phone number he rang, tax office the HMRC was physically in, date and time of call. So in January 2011 when HMRC rang to fine him for late registration we had them banged to rights, most car dealer guys new to VAT would be staring a hefty VAT bill in the face with no chance of recovery from customers.

Note this VAT application took over 4 months to issue. 4 months in limbo land. How hard can it be to issue an 8 digit number?

antonic

Ever heard of MTIC fraud Chrismac1 ?

Thats why it takes so long for a VAT number to be issued following the request for registration because off all sort of checks have to be carried out BEFORE the VAT Registration Number is issued.

If I was to call a government department I would make a note of who I was calling !

(BTW a VAT Registration Number is 9 Numbers eg XXX-XXXX-XX, not 8 as you stated).

chrismac1

I stand corrected it is 9 digits. Yes I have heard of carousel fraud. My question is simple:

How much money has been defrauded in the lifetime of the tax system by issuing a VAT number?

The answer I am 99% confident is zero, unless HMRC have started making payments when they issue VAT numbers which would not surprise me I admit. The fraud takes place when the VAT payment is made on the basis of the fraudulent return, that is the point in the system to get excited about and even send in the boys in blue if you want.

The current jobsworthy approach - not just in VAT, every other tax too - penalises the 90% of honest people registering on the pretext of preventing frauds attempted by the other 10%.

Only one word does this justice - Bonkers!

antonic

chrismac1 wrote: »

I stand corrected it is 9 digits. Yes I have heard of carousel fraud. My question is simple:

How much money has been defrauded in the lifetime of the tax system by issuing a VAT number?

The answer I am 99% confident is zero, unless HMRC have started making payments when they issue VAT numbers which would not surprise me I admit. The fraud takes place when the VAT payment is made on the basis of the fraudulent return, that is the point in the system to get excited about and even send in the boys in blue if you want.

Lots of money is defrauded this way ! - you get VAT registered you then start taking money (esp if you are a cash business) you then spend the money and so when you submit your quarterly VAT return you cant pay and then HMRC start getting medieval on you.

The current jobsworthy approach - not just in VAT, every other tax too - penalises the 90% of honest people registering on the pretext of preventing frauds attempted by the other 10%.

So you would prefer numbers to be issued like they were in the past and give a green light to potential fraudsters to make money ?

Only one word does this justice - Bonkers!

I prefer bonkers to the country being broke

nikki1520

So there's never been a fraud committed where a completely innocent sounding business registers for VAT then the business mysteriously changes trade class and becomes a carousel broker then?

chrismac1

Nope there has not. REGISTERING for VAT does not generate a cash flow. It is putting in the fraudulent return and asking for a repayment of VAT which generates the cash flow. This is my point. HMRC mentality is to jump all over the application for a number with their silly checks - silly in the sense that 90% of the time they are pointlessly slowing up cash flows towards the Treasury. Of course the "modern" HMRC approach is to sit on their arrrses trying to do everything from their computers, instead of having people out there on the ground physically visiting and checking taxpayers whose first tax return is a request for money.

nikki1520

But REGISTERING for VAT does open the door to putting in a repayment claim, and if enough people do this at the same time, there are physically not enough staff to go out and check every single one. Of course this delay is met with understanding by both the claimant and their agents.

And there were no people ever selling VAT numbers as TOGC's as some people couldn't get one

And there were never people sending in 500 VAT 1's a week, to register all their buffers and brokers.



Totally agree about the approach though

or I dreamt a whole five year period of my life at work.

chrismac1

"I prefer bonkers to the country being broke."

My point is that this pedantic approach to issuing numbers makes the public sector cash flows worse not better. Get the UTRs and VAT numbers out within 3 days of the requests, in 90% of cases these numbers are going to produce cash flows from the taxpayer to the Treasury.

For the other 10%, have enough staff so that you can make phone calls to them and if necessary go round there. In the case of VAT, you could ask them for a schedule of the supplier invoices they wanted to reclaim VAT on. This seems like commonsense to me, if the supplier invoices all come back "Zimbabwe IT Inc" then you're not going to issue the cheque. Again, having a schedule of invoices gives you the chance to call up any businesses on the list you think might not be legitimate.

The system as it is was just about OK when HMRC was properly run. Now that HMRC is a shambles and routinely takes months not weeks just to answer mail, the extra burden being imposed on legitimate businesses having to wait in limbo land for 3 or 4 months is unacceptable.