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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15915
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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AS A NEW COMPANY WE HAVE CLAIMED BACK THE INPUT VAT ON PURCHASES

Resolved Question:

AS A NEW COMPANY WE HAVE CLAIMED BACK THE INPUT VAT ON PURCHASES BUT THE INVOICES WERE IN THE NAMES OF THE DIRECTORS. THE PURCHASES WERE 100% FOR BUSINESS USE AND IN SOME CASES WERE EVEN DELIVERED TO OUR OFFICES.
CAN HMRC OBJECT TO THESE CLAIMS?
Submitted: 3 years ago.
Category: Tax
Expert:  TonyTax replied 3 years ago.

Hi.

Why were the invoices in the names of the directors? Who paid the invoices?

Customer: replied 3 years ago.

THE DIRECTORS WERE NOT AWARE THEY HAD TO BE MADE TO THE COMPANY AND AS THEY WERE RE-IMBURSED BY THE COMPANY THEY ASSUMED THEY WERE CLAIMABLE. THE DIRECTORS ARE IN A FAST MOVING IT PROGRAMMING BUSINESS AND JUST DIDNT GIVE IT A THOUGHT.


IN SOME CASES THE DELIVERY ADDRESS WAS THAT OF THE COMPANY.

Expert:  TonyTax replied 3 years ago.
Thanks.

Invoices have to be in the name of the purchaser if that purchaser does not want to have problems if and when a VAT inspection occurs. A reasonable VAT inspector should take a view on it and put it down to lack of experience on the directors part but another may play hard ball.

You should ask the suppliers to re-issue the invoices in the name of the company and to cancel those in the names of the directors. You might find the vendors are reluctant to do that but if the company will be buying from them in the future, they may be more amenable.

Take a look here for information on how invoices should be prepared here and here and an article on purchase invoices here.

I hope this helps but let me know if you have any further questions.
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Customer: replied 3 years ago.

Hi - I was under the impression that if the directors purchased on the company's behalf then as long as they make a written declaration to this effect it would be accepted by HMRC.


I had an inspection and HMRC allowed a van which was registered to the individual to be claimed (VAT) by the company. The director had to make this declaration.


I don't know if this valid for other purchases. Also staying in a hotel can be claimed if invoice on the employee/directors name as per VAT NOTICE 700/15 Note 4.

Expert:  TonyTax replied 3 years ago.

It's a fine line but I did say a reasonable VAT inspector would probably take a view on it and the van case illustrates that. You didn't say whether the directors had made a similar declaration.

My advice to anybody who asks this question is to have the company's name somewhere on the invoice.

A reasonable VAT inspector would allow a claim for repayment of input tax shown on an invoice in the name of a director. Not all companies operate a company credit card so there is some leeway but I'd always advise an individual to try to get the supplier of the goods or service to put the company name on the invoice as well as the director's name.


Basically, you should not make it easy for the VAT inspector to disallow claims and getting the right name on a purchase invoice is no more difficult than getting the wrong name on the invoice.

Customer: replied 3 years ago.

Ok I understand. In most of the cases although the director has used his own details to pay the invoice - the shipping address has been the company address. This has been because the company did not have credit cards. The director was then reimbursed from the company.


 


I think as the VAT has already been claimed - we should not have an issue with the VAT inspector at a later date as we can argue the reason?


 


Thank you for your kind response.


 

Expert:  TonyTax replied 3 years ago.
I think you will be fine. You can clearly demonstrate that the items were bought for the business and the company currently has or didn't have its own credit or debit card at the time the equipment was bought.

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