Can a company ask for VAT payments retrospectively?

Jonboy_1984

It is something that I have come across a few times over the years on a business to business basis, in that case we would pay it on the last day of VAT quarter and then claim it back on the return.

As a non-VAT registered consumer I wouldn’t entertain it for a moment. It may be an accountant or bookkeeper assuming all account customers are VAT registered as they let themselves out.

CKhalvashi

Bookowl said:

Ergates said:

Bookowl said:

*seems to only apply to those who set up personal or business accounts.

Wouldn't that be all accounts?

Why didn’t they just decide to charge all customers  who used taxis from 2017-2022, why single out those with accounts?

i don’t think it’s fair because they didn’t have their affairs in order or weren’t aware of the rules. It shouldn’t be passed to the customer.

To use the analogy of buying a sofa, for example, and 5 years later the company get in touch to say, we forgot to charge you to VAT!?. That’s on the company to sort out surely.

Because if you are paying at the end of the journey, your contract is with the driver who is paying a radio rental fee (normally a smartphone app rental these days).

If you are paying on account your contract is with the company.

There is a legal difference between the two and HMRC accepts this. As an account was set up, VAT applies on the metered rate and can be added as an extra charge.

Sections 3.3 and 3.5 are most applicable. https://www.gov.uk/guidance/how-vat-applies-to-taxis-and-private-hire-cars-notice-70025

user1977

CKhalvashi said:

Bookowl said:

Ergates said:

Bookowl said:

*seems to only apply to those who set up personal or business accounts.

Wouldn't that be all accounts?

Why didn’t they just decide to charge all customers  who used taxis from 2017-2022, why single out those with accounts?

i don’t think it’s fair because they didn’t have their affairs in order or weren’t aware of the rules. It shouldn’t be passed to the customer.

To use the analogy of buying a sofa, for example, and 5 years later the company get in touch to say, we forgot to charge you to VAT!?. That’s on the company to sort out surely.

Because if you are paying at the end of the journey, your contract is with the driver who is paying a radio rental fee (normally a smartphone app rental these days).

If you are paying on account your contract is with the company.

There is a legal difference between the two and HMRC accepts this. As an account was set up, VAT applies on the metered rate and can be added as an extra charge.

Sections 3.3 and 3.5 are most applicable. https://www.gov.uk/guidance/how-vat-applies-to-taxis-and-private-hire-cars-notice-70025

None of that affects the customer though. They pay whatever the advertised rate is, it's up to the taxi company to account for the VAT out of whatever they've been paid.

Flight3287462

As I said before the taxi company have been rumbled by HMRC and are fishing.

unholyangel

Bookowl said:

Thanks All!  
The wording in the email I received:
we are legally obliged to collect historic VAT due to them on their behalf.

Surely it’s between HMRC and the taxi firm?
the company charged VAT on the admin fee but not the account fares.

I’m very worried about this. 

They are legally obliged to collect vat due to hmrc. But they didn't. 

However they are not legally obliged to collect historic vat due to hmrc. They are legally obliged to pay historic vat to hmrc. 

The important part is that they don't have any legal basis for asking you to pay more than the agreed price, even if they didn't charge enough. They can't unilaterally vary the terms to their benefit and your detriment just because they screwed up. 

Bookowl

unholyangel said:

Bookowl said:

Thanks All!  
The wording in the email I received:
we are legally obliged to collect historic VAT due to them on their behalf.

Surely it’s between HMRC and the taxi firm?
the company charged VAT on the admin fee but not the account fares.

I’m very worried about this. 

They are legally obliged to collect vat due to hmrc. But they didn't. 

However they are not legally obliged to collect historic vat due to hmrc. They are legally obliged to pay historic vat to hmrc. 

The important part is that they don't have any legal basis for asking you to pay more than the agreed price, even if they didn't charge enough. They can't unilaterally vary the terms to their benefit and your detriment just because they screwed up. 

The taxi company said they’d give the money to HMRC. Which I very much doubt.

Jenni_D

The taxi company can say what they like - and they probably would, as they owe HMRC; you don't have to pay them anything.  

CKhalvashi

Jenni_D said:

The taxi company can say what they like - and they probably would, as they owe HMRC; you don't have to pay them anything.  

And that would surely depend on the terms of the contract, which is a contract we have not seen.

For the record, ours stated (even for consumer contracts) that VAT will be added to metered/quoted fares and can be billed back 6 years in the case of admin error.

I would be surprised if this didn't state something similar, but OP has not answered this.

Jenni_D

Does it go on to explain what the VAT rate is, or state that VAT will be applied at the prevailing rate?

For a consumer contract then the total price must be clearly stated, or explained how it is derived. Any ambiguity in the contract must favour the party which did not draft the terms (Contra Proferentem), so if the term is unclear then the taxi is up the proverbial creek.

I agree that the OP needs to carefully read the T&Cs of the original contract.

user1977

CKhalvashi said:

Jenni_D said:

The taxi company can say what they like - and they probably would, as they owe HMRC; you don't have to pay them anything.  

For the record, ours stated (even for consumer contracts) that VAT will be added to metered/quoted fares and can be billed back 6 years in the case of admin error.

I very much doubt that would be enforceable against consumers. And from the OP it sounds like even the taxi company weren't aware they ought to have been adding VAT, so I doubt they would have been telling customers that VAT was going to be added.