Wrongly charged VAT

p1583m

Hi All, I had a builder extend my home. Works ‘completed’ March 2022. Ongoing issues since but irrelevant to this post. 

His original quote some 12 months before showed a net vat breakdown then vat at 20% totalling £7500. Works were just under £45k incl VAT. There was no VAT number on his documents at that time. 

I’ve since communicated with a competitor of his and at least one other homeowner who has used him and my understanding is he isn’t VAT registered and hasn’t charged other customers VAT. He was carrying out 2 or 3 other extensions in our village at the same time with at least the same value so I just assumed he was VAT registered. 

He has only ever invoiced me once. This was for supply of a kitchen which included VAT but that VAT was to the kitchen company. He didn’t charge any overhead or VAT on the kitchen quote. There was no VAT number on that invoice despite VAT being shown for the kitchen supply.  

All other stage payments I’ve paid in good faith in the hope it would keep him going on my project and that he would do a good job. How wrong I was!

It seems I’ve paid him around £5k of the £7500 he originally claimed was for VAT. 

I had previously asked for his VAT number but he did not reply. I’ve asked again and awaiting a reply. 

Has anyone had any similar issues? I understand that it’s a dispute between us and the HMRC not interested at this stage and didn’t provide much advice. There is also no function to establish his VAT number. You can only check a number is valid if you have one. 

I’ve said that if there is no VAT he should provide me with a refund. 

What are my options if he doesn’t? Is it worth making a claim for money? 

tightauldgit

1. It's quite serious to be charging VAT when you are not registered. Why are HMRC not interested? They could/should be charging him a penalty of up to 100% of the VAT. Furthermore HMRC have a VAT helpline where you "should" be able to phone up and check if a company is VAT registered. 

2. If you can confirm that he's not VAT registered and you have an invoice showing you VAT as a separate line item then you are due a 100% refund of that amount. And it should be a relative slam dunk if you went to small claims court. If he isn't VAT registered then he has no right to be charging VAT. 

3. If he was doing 3 £45k jobs then he SHOULD be VAT registered though and if he isn't that's also an issue HMRC should be interested in. The downside is that probably doesn't get your money back. 

p1583m

1. My understand is The VAT helpline only helps you validate a Vat number. they wouldn’t give me one. The chap I spoke to didn’t really seem to know what he was talking about. 

2. I only have one invoice from him. He never provided me with one and was normally unwilling to. The only other document is a quote with the £7500 VAT breakdown but it’s not an invoice. He never receipted me for any payments I made to him. Which probably goes to show how bad his paperwork is. My wonder is, because he never invoiced or receipted and I always paid in good faith, whether the court would rule in my favour. I think they might because he’s been misleading and dare I say it fraudulent. 

3. Yes if he is earning over the threshold he should be VAT registered. I know there is a website to report it. 

HampshireH

Edit : deleted my original post as missing the bit about the quote.

If you have the quote including VAT then formally wrote to him stating you would like a receipt for all payment made and confirmation he is VAT registered.

You say he never receipted but did you ask him to? 

screech_78

Even if a court did rule in your favour, that doesn’t mean you’ll get any money back. He would actually have to pay up so you would need to make sure there are assets to pay first. 

p1583m

HampshireH said:

Edit : deleted my original post as missing the bit about the quote.

If you have the quote including VAT then formally wrote to him stating you would like a receipt for all payment made and confirmation he is VAT registered.

You say he never receipted but did you ask him to? 

I Never asked for a receipt…

p1583m

screech_78 said:

Even if a court did rule in your favour, that doesn’t mean you’ll get any money back. He would actually have to pay up so you would need to make sure there are assets to pay first. 

I’ve done a land registry search on his house and he owns that. 

eskbanker

Is he definitely acting as a sole trader or through a limited company?

p1583m

eskbanker said:

Is he definitely acting as a sole trader or through a limited company?

The company he trades under isn’t a limited company so I assume he’s a sole trader? 

DullGreyGuy

HampshireH said:

If you have the quote including VAT then formally wrote to him stating you would like a receipt for all payment made and confirmation he is VAT registered. 

There is no legal requirement for them to issue a receipt, the only time one is legally required on demand is where the buyer is also VAT registered. You can ask for one, like you can ask for proof of VAT registration, but again not required to provide it.

If the OP thinks they arent VAT registered when they should be they can report it https://www.gov.uk/report-tax-fraud 

tightauldgit

p1583m said:

1. My understand is The VAT helpline only helps you validate a Vat number. they wouldn’t give me one. The chap I spoke to didn’t really seem to know what he was talking about. 

2. I only have one invoice from him. He never provided me with one and was normally unwilling to. The only other document is a quote with the £7500 VAT breakdown but it’s not an invoice. He never receipted me for any payments I made to him. Which probably goes to show how bad his paperwork is. My wonder is, because he never invoiced or receipted and I always paid in good faith, whether the court would rule in my favour. I think they might because he’s been misleading and dare I say it fraudulent. 

3. Yes if he is earning over the threshold he should be VAT registered. I know there is a website to report it. 

1. What did you actually ask the guy on the HMRC line? I suspect the correct thing to do would be to explain you have been charged VAT by someone who you believe is not VAT registered. At the end of the day its up to the trader to prove they are registered not you to find it out. If they haven't given you a VAT number then you should assume they aren't registered

2. Again, a court should rule in your favour either way. Either he's fraudulently charged you VAT or you've overpaid due to an error. If the original quote showed VAT in error then you should be refunded any that you paid. And he should still report himself to HMRC and get fined a minimum of 10% of the total amount

3. Then report it.