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UK-Justice
UK-Justice, Barrister
Category: Law
Satisfied Customers: 16193
Experience:  Called to the Bar in 2007
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Hi, We are a Recruitment Agency and we placed a Limited company

Customer Question

Hi, We are a Recruitment Agency and we placed a Limited company contractor with a company. He registered with an Umbrella Company which in effect acts like his accountant.

The Umbrella Company he worked through, started charging us VAT without being registered for VAT. When we twigged that he wasn't VAT registered we stopped paying the contractor's company. The contractor has told us that the company dishonestly took the VAT and it is for our company to reclaim it.

We are saying that he is part of the umbrella company and is responsible for paying us the VAT and then should reclaim it from the umbrella company he was working through.

He has now moved to another company and is demanding to be paid for the work he is completing and telling us to chase the money from his original umbrella company.

We have told him we won't pay him until he has paid every penny of the VAT owed to HMRC as we have been claiming the VAT back not realising he wasn't VAT registered and need to pay the money back to HMRC.

What is our position on this?
Submitted: 4 years ago.
Category: Law
Expert:  UK-Justice replied 4 years ago.
Thanks for your question, my name is Nic I will do whatever I can to help you today.

Did they not provide a VAT invoice with VAT number?
Customer: replied 4 years ago.


The Company didn't provide the VAT number and told us that they were in touch with HMRC and getting the VAT number sorted and in the meantime we should pay them VAT.

Expert:  UK-Justice replied 4 years ago.
What you can do is pay the contract the amounts LESS the VAT.

You should pay what you owe as just because they are charging VAT does not mean the work has not been done.

So you can backdate all the VAT that has been paid and then offset that against any future invoices.

That is the fairest way the matter is dealt with.

Then if he complains and issues proceedings then you can defend it on the basis that no VAT is payable or due.

But you should pay less VAT element.

I hope this helps and if there is anything else I can do to help you today please let me know.


Please remember to click *** OK SERVICE *** or above so that I am credited for my time. The question does not close and you can ask follow ups.

Important: If you feel the need to rate as one of the lower two scores, it counts as negative feedback so please reply to me via the REPLY with any further questions you may have. I will be happy to assist you further.
Customer: replied 4 years ago.


Hi, What I am asking is whether I am entitled to take the VAT owed by the representative of the Company (The Contractor) or I should chase the Company he previously worked for, for the moeny. Obviously if I chase them they will go into liquidation. As per your message are you saying that once he has paid the VAT element back to me which I will subsequently pay to HMRC then I will pay him as per usual?

Expert:  UK-Justice replied 4 years ago.
If in reality he is one and the same company and this is just a 'sham' company then you should with hold VAT as suggested - yes.

I hope this helps and if there is anything else I can do to help you today please let me know.


Please remember to click *** OK SERVICE *** or above so that I am credited for my time. The question does not close and you can ask follow ups.

Important: If you feel the need to rate as one of the lower two scores, it counts as negative feedback so please reply to me via the REPLY with any further questions you may have. I will be happy to assist you further.
Customer: replied 4 years ago.

So I have every right to reclaim the VAT off the contractor untill all VAT is paid. Thanks

Expert:  UK-Justice replied 4 years ago.
Yes.

The new company seems a sham company.

I hope this helps and if there is anything else I can do to help you today please let me know.


Please remember to click *** OK SERVICE *** or above so that I am credited for my time. The question does not close and you can ask follow ups.

Important: If you feel the need to rate as one of the lower two scores, it counts as negative feedback so please reply to me via the REPLY with any further questions you may have. I will be happy to assist you further.
Expert:  UK-Justice replied 4 years ago.
I'm just following up with you to see how everything is going. Did my answer help?

UK-Justice