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Alex J.
Alex J., Solicitor
Category: Law
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Experience:  Solicitors 2 years plus PQE
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Help:I previously had a construction project management

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I previously had a construction project management business, forced into when I was made redundant during the latter part of the recession. I was recommended by a previous colleague to do a fit out contract for his friend. I met the client and listened to what he wanted, I prepared costs for the cutout for him, too expensive he said, costs were cut by downing spec and removing items, still tight I told him but we proceeded and over the duration of the contract subcontractors and suppliers were appointed and paid including their vat. The project was handed over early 2013 and my client was delighted and it has been trading well since.3 weeks ago I received a phone call out of the blue from my client to state he had tried to reclaim vat.This is where our problem begins and no I haven't pocketed money as follows:I charged him vat but I was not vat registered purely to cover the vat payments to subcontractors and suppliers because I didn't have the cash flow to cover the vat and reclaim later myself. All subcontractors and suppliers as mentioned above were paid no debts for the project.I had no personal money and took an employed job two weeks into the project he is holding me personally liable for the vat, company struck off over 2 years ago, can he, can vat come after me? Help
Submitted: 8 months ago.
Category: Law
Expert:  Alex J. replied 8 months ago.
Hi, Thank you for your question and welcome. My name is ***** ***** I will assist you. If the invoice came from a limited company and was paid to a limited company (which has now been struck off), then this would money that would be owed by the company. He therefore cannot pursue you personally for the debt of a limited company you owned. That is the purpose of a limited company, is to create a distinct legal entity and limit the liability of its owners to the paid up share capital. Has he threatened to sue you? Kind regards AJ
Customer: replied 8 months ago.
Thanks very much for your reply which is pretty much what I thought. He has sent me a solicitors letter stating that he holds me personally liable, he hasn't threatened to sue me yet. I did not set out to deceive him, I didn't want to vat register as I knew that the business would have to close down as I wasn't making money and that is why I took an employed job. He knew I took an employed job 2 weeks into his project and he was happy for me to service his project with my attendance on his fit out site early morning, lunch times and evenings, surely he would guess that I needed to make money elsewhere. I had no cash to cover vat paid to suppliers and subcontractors, they were all paid and no debts, the client got his project handed over on time and he was delighted with it and I believe it is thriving currently.Can vat come after me after my business had been struck off?
Expert:  Alex J. replied 8 months ago.
Hi, Thank you. Write back to him and deny you are personally liable and state that a limited company is a distinct legal personality and you are not responsible for its debts. Say to him it is a criminal offence to pursue some for money they do not owe under S.40 of the Administration of Justice Act 1970.If HMRC were investigating the company then they would have to restore to the register and possibly put it into liquidation before holding you personally liable for its debts. You were not actually charging VAT, you were effectively passing on VAT as a cost arising from payment to the suppliers. The problem you caused to your client was by describing as VAT that you recharge, led him to believe he could reclaim. I think you made a mistake but I do not think this is behaviour that would cause you to be subject to sanction. Your client should have seen you were not actually issuing VAT invoices.
Customer: replied 8 months ago.
What is the difference between my invoice, mine had no vat number on it and a VAT invoice? What is my next step as I need to reply to them by Wednesday?
Customer: replied 8 months ago.
Im frightened of what he can do to be honest, I don't have the funds or the source to get the funds, VAT man knocking on my door, house taken from me, prison. Why cant he just except that he had to pay VAT like most people do and just except it. The building was a building supplies unit, it was bought and converted to a recording studio, taking down walls, building new partitions, floors and ceilings, new electrics and lighting with finishes. I don't understand VAT, period, but how can he reclaim on this type of works?
Expert:  Alex J. replied 8 months ago.
Hi, Thank you. Did the invoice for which they are reclaiming the VAT come from the company or you personally?
Customer: replied 8 months ago.
From the company
Expert:  Alex J. replied 8 months ago.
If the invoice came from the company, any attempt to reclaim the vat must go to the company not you personally. The VAT man is not going to send you prison for a mistake, you have to have actually committed a fraud. How much money is being reclaimed? Kind regards AJ
Customer: replied 8 months ago.
163;22329 being reclaimed. My business doesn't exist it was struck off over two years ago. I have made the other party a where of this when he called 3 weeks ago.Can the vat man reinstate my company and go after me that way?Can the other party sue me personally?
Expert:  Alex J. replied 8 months ago.
Hi, Thank you. (i) the VAT man can potentially pursue you, but I cannot see what they would pursue you for. The VAT was presumably paid to the VAT eventually - you did not actually keep it in the company? (ii) The other party cannot sue you personally for an invoice that arose from the company. Kind regards AJ
Customer: replied 8 months ago.
The vat was paid out, I have invoices from suppliers and subcontractors that included VAT, I paid these invoices in full.How should I summarize my letter back or am I best to get a lawyers letter back to them?
Expert:  Alex J. replied 8 months ago.
Hi, Thank you. In all honesty it would be best to get a solicitor to respond with your denial of owing the money - seeing a letter on headed paper from a solicitor gives it the added gravitas that you have been advised and cannot be bullied. If you would want to respond directly I would make clear (i) You deny you owe any money (ii) the sums they are taking about relates to invoices issued by the company which are not your issue (iii) Say that they should not be pursuing you for money you do not owe as this is a criminal offence under the Administration of Justice Act 1970 S.40. Kind regards AJ
Customer: replied 8 months ago.
Thanks for your assistance on this matter.RegardsTony
Expert:  Alex J. replied 8 months ago.
Thank you. I would be must grateful if you would rate my answer. If I can assist any further please do not hesitate to contact me.Kind regards AJ
Alex J., Solicitor
Category: Law
Satisfied Customers: 3519
Experience: Solicitors 2 years plus PQE
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Customer: replied 8 months ago.
AJ I have prepared the following:Hello Mr HodgeI am responding to your letter dated 3rd May 2016 regarding a claim for Vat from my previous business 'Haddow Project Management Ltd' this business no longer exists and was struck off a number of years ago.I received a call from Mr Malcolm Todd just over 3 weeks ago and I returned his call where we discussed his contact with VAT to reclaim the vat for his project.I have paid the 20% to the subcontractors and suppliers for these works and indirectly VAT have had their money.I have taken advice from a number of parties including accountants and a lawyer and have been advised the following:1.The invoice came from a limited company and was paid to a limited company (which has now been struck off), then this would money that would be owed by the company. He therefore cannot pursue me personally for the debt of a limited company I used to own. As you are mostly likely a where that is the purpose of a limited company, is to create a distinct legal entity and limit the liability of its owners to the paid up share capital.
2.I did not set out to deceive him, I didn't want to vat register as I knew that the business would have to close down as I wasn't making money and that is why I took an employed job. He knew I took an employed job 2 weeks into his project and he was happy for me to service his project with my attendance on his fit out site early morning, lunch times and evenings, I concluded the project and they were trading very well I believe.
3.It is a criminal offence to pursue someone for money they do not owe under S.40 of the Administration of Justice Act 1970.
4.I was not actually charging VAT, there was no Vat number on my invoices, I was effectively passing on VAT as a cost arising from payment to the suppliers. I did not know he intended reclaiming vat.
5.The invoices issued were from the company.I have taken this advice on its merits and repeat I did not set out to deceive 7th Harmonic.I can get a lawyer to relate the same if required.RegardsTony
Expert:  Alex J. replied 8 months ago.
Thank you. I have just received this I will review it this morning. Kind regards AJ
Expert:  Alex J. replied 8 months ago.
Thank you. I am not sure I would include the last sentence. I would say something like I trust this brings the matter to a close or I am happy to provide you with further information, but the threats for money and pressure being placed on you must stop. You want to sound authoritative, but it is also good not to come across too legal sounding, you can save this for if you ever hire a solicitor.
Customer: replied 8 months ago.
HelloI have just received an email from the other parties solicitor to be advised that S40 of the Administration of Justice Act 1970 does not extend to Scotland, please advise? He also stated that he is taking instructions from his client.ThanksTony
Expert:  Alex J. replied 8 months ago.
Hi, Thank you. Aside from the point of harassment and making threats - that would have helped in order to get him to back off. In any event he is still making the claim against you personally which is clearly not correct if the invoice was a company invoice. Kind regards AJ

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