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Ash
Ash, Solicitor
Category: Law
Satisfied Customers: 10916
Experience:  Solicitor with 5+ years experience
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Hi, I run a small business which provides contract catering

Resolved Question:

Hi, I run a small business which provides contract catering for a club - serving meals and drinks to members of the club and paying commission on these to the club. I took over the business from my partner who went bankrupt last year - he was vat registered. I also intended to register for vat but didn't get around to it and used the same excel spreadsheets to work out the commission to the club for each month - ie taking vat off before working out the commission. The error has been brought to my attention and I have worked out the underpaid commission. I also have never issued a vat receipt or used a vat number as I did not register for vat, and as it turns out I did not need to as my turnover was below the registration threshold. The club are asking me for the vat back on all the meals and drinks that the members paid for during the period as they assumed that I was vat registered rather than accepting the underpaid commission - what should I do?
Submitted: 2 years ago.
Category: Law
Expert:  Ash replied 2 years ago.
Alex Watts : Hello my name is ***** ***** I will help you with this. Please note that I am a working Solicitor and may be on and offline as I have to attend Court and meet with clients, even at weekends. As such you may not get an instant response when you reply, but rest assured I will be giving your question my immediate attention upon return You do not need to wait here as you will get an email when I reply.
Alex Watts : Did you ever charge the VaT element please?
Customer:

Thanks Alex. I didn't charge any VAT on the meals or drinks - an invoice is issued at the end of each evening for all of the meals, I used a standard triplicate pad for this and it literally just said the set price, no breakdown of VAT or VAt number. The drinks were paid for individually through the till, there is no vat no on the receipts (if they ask for one). The club committee assumed that I was VAT registered as my partner had been and they are saying that the club members assumed the same. The price of the meals is agreed in the contract with the committee and the only reference to VAT in the contract is in the commission schedule where it says "all income derived from the supply of catering services under the agreement (exclusive of VAT)" then it lists the price of the meals per person (the same amount that I charged to the club members) and the percentage commission due per meal.

Alex Watts : If you never charged for VaT and it was never shown on an invoice or vat number then it has not been charged.
Alex Watts : If it has not been charged you do not need to pay it back.
Alex Watts : If you did itemise vat or charge it then that needs to be repaid.
Alex Watts : But if you never charged vat or itemised it no payment is due
Alex Watts : Can I clarify anything for you about this today please?
Customer:

Thanks Alex, do I need to do anything with regards ***** ***** amended my sa tax return to include the commission that was actually due. The only thing I'm worried about is the commission spreadsheets I did took the vat off the total sales amounts and then worked out the percentage commission from there, so I underpaid them by the amount of vat taken off - I've recalculated the sheets to take the commission of the full amount and told them that I need to pay them what was inadvertently taken off the commission. Can they take this any further and would I be in any trouble with hmrc?

Alex Watts : If you don't quality for vat then you need to make sure that element is counted as income on the return. But I u defeat and you have already done this.
Alex Watts : If that is the case there is no further action to be taken.
Alex Watts : The club can try and take you to court, but if there is no vat charged or invoice for vat they would not succeed.
Alex Watts : Does that help?
Customer:

Thank you

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