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Ash
Ash, Solicitor
Category: Law
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Experience:  Solicitor with 5+ years experience
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We have a contract issue with a software company. We signed

Resolved Question:

Hello. We have a contract issue with a software company. We signed a contract one month ago and have not completed training or started using their software because it isn't right for the company as a product. The contract was signed on an order form which listed the amount as £400 a month with VAT as 'n/a', ie, not applicable. Since we have received invoices with VAT added on top. Because the order form was signed on the premise of VAT not applying to the agreement does that nullify the contract because the agreement is clearly not VAT exempt?
Submitted: 1 year ago.
Category: Law
Expert:  Ash replied 1 year ago.

Hello my name is ***** ***** I will help you with this.

Did they become VAT registered in the meantime please?
Alex

Customer: replied 1 year ago.
Hi, to the best of my knowledge that is not the case. It has been a short period of time. Their VAT registration number is###-##-####and there companies house number is ***** - Everylife Technologies Limited.I am attempting to see if we can find out the day of their VAT registration online. They have been in trading for atleast 1 year to 18 months now.
Expert:  Ash replied 1 year ago.

Ok- would it nullify the contract - no it would not.

By law they have to charge VAT if they are VAT registered and the supply attracts VAT

So in law they would have to charge VAT if they are registered and it qualifies for VAT.

Therefore to answer your question - does it invalidate the contract - no.

You may have some argument to negotiate on price, because of this change.

I am sorry if this is not the answer you want and certainly not the one I want to give you, but I have a duty to be honest

Can I clarify anything for you about this today please?
Alex

Customer: replied 1 year ago.
Thanks Alex.Is that the case when it is explicitly stated on the order form n/a under the VAT form. Is there an argument that we were sold the software on an incorrect premise?
Customer: replied 1 year ago.
Additionally the sales person told us that it does not attract VAT.
Expert:  Ash replied 1 year ago.

Thats an argument but it does not invalidate the contract which is what you are asking.

Neither is the fact it does not attract VAT. If its chargeable supply then it is. You need to check with HMRC to see if it attracts VAT

Does that clarify? Alex

Customer: replied 1 year ago.
Hmm. Not exactly. We understand VAT applies irregardless of the contract. Our concern is not with paying VAT or not paying VAT. We are seeking additional reason to exit the contract (there has been an NDA issue also). You say there is an argument but does it have a legal basis? Is it substantial enough to request cancellation of the contract? (we dont necessarily need the contract to be nullified)
Expert:  Ash replied 1 year ago.

Is it enough to cancel - no.

You may have an argument for breach of contract, but it does NOT make it void as a result.

You would be entitled to the difference but not to exit.

Does that clarify? Alex

Customer: replied 1 year ago.
Okay, understood. Thanks
Expert:  Ash replied 1 year ago.

I am sorry its not the answer you want, I really am - but I need to be honest.
Can I help with anything else today? Alex

Customer: replied 1 year ago.
It's alright Alex. Have a good weekend
Customer: replied 1 year ago.
Thanks for your help.
Expert:  Ash replied 1 year ago.

Thank you and I hope yours is enjoyable too. It will go too quickly I am sure. If this answers your question could I invite you to rate my answer before you go today, otherwise the site doesn’t pay me for the time spent with you. Thanks in advance! Alex

Ash and other Law Specialists are ready to help you
Customer: replied 1 year ago.
Oh dear, okay. I'll make sure I do that!
Expert:  Ash replied 1 year ago.

Thanks very much. Have a good one. Alex