VAT Fraud

[Speed1972]

This has just come to my attention!

We suspect one of our sub contractors is not VAT registered. But has been charging us VAT for the last few years.

Obviously we've been claiming this VAT back.

What are our options here. If we stop using him and stay quiet?
If we report him, are we liable for all the VAT we've claimed for their invoices?

 

[Paul Kelly ICHYB]

Go here to check their VAT number:

What is the UK VAT number you want to check? - Check a UK VAT number - GOV.UK

www.tax.service.gov.uk

If they are not registered have a chat and ask them to adjust their invoice and repay the funds. You could then reverse out your VAT payments on your next return.

Report them to HMRC after you have been paid, not before!

 

[DWS]

Did you not check the VAT number before paying them?
Is this within CIS?

 

[Speed1972]

Did you not check the VAT number before paying them?
Is this within CIS?

Not CIS.

When I tried years ago to check a VAT number the only response was yes this is a valid VAT number.. Now you can get business details but thats not always been the case as far as I'm aware.

 

[Mark T Jones]

Not CIS.

When I tried years ago to check a VAT number the only response was yes this is a valid VAT number.. Now you can get business details but thats not always been the case as far as I'm aware.

It's been the case for 10 years to my knowledge

Why do you suspect they aren't VAT registered?

 

[JEREMY HAWKE]

Did you not check the VAT number before paying them?
Is this within CIS?

Who checks a VAT number when paying an invoice?

• come on dont pretend that you do . Yes someone on here are going to say they do there is always one

 

[Bobbo]

Not CIS.

When I tried years ago to check a VAT number the only response was yes this is a valid VAT number.. Now you can get business details but thats not always been the case as far as I'm aware.

So now you've checked the VAT number... was it valid, and related to that particular subcontractor?

 

[DWS]

Who checks a VAT number when paying an invoice?

• come on dont pretend that you do . Yes someone on here are going to say they do there is always one

I dont but I’m not VAT registered!

 

[Mark T Jones]

Who checks a VAT number when paying an invoice?

• come on dont pretend that you do . Yes someone on here are going to say they do there is always one

This is more than just paying an invoice though.

That someone is me - it was drummed in to me from day 1

 

[Ozzy]

Can you get the VAT overpayment back to them?
If not, pay it to HMRC and take the hit. If so, get it back from them and repay it to HMRC.

Is the amount you have basically overclaimed exceeding £10k or 1% of the value of your revenue for the current VAT quarter?
If so, you need to make a declaration (VAT652) or if under then just correct it in your next VAT return.

If they are committing fraud then you are expected to report them. If they are just inexperienced and think all 'business' is supposed to have VAT on their invoices (I have seen this happen!), then they need to rectify that with HMRC and will need to repay the relevant customers, or get a quick registration in place and pay onto HMRC whilst informing people of their correct VAT number.

To @JEREMY HAWKE and @Mark T Jones comments, I didn't check VAT numbers in the past and it cost me into the hundreds of thousands to put it right.

 

[Paul Kelly ICHYB]

Can you get the VAT overpayment back to them?

I don't think it is an overpayment to HMRC - it would probably be an under payment, as the VAT charged would have offset set VAT collected. This would mean an under payment to HMRC.

If they can get the money back, they process a VAT credit note that reverses the transaction and would increase their VAT liability.

Does that make sense - when I read it back, it is a bit cloudy (it has been a long day for me!)?

 

[MyAccountantOnline]

This has just come to my attention!

We suspect one of our sub contractors is not VAT registered. But has been charging us VAT for the last few years.

Obviously we've been claiming this VAT back.

What are our options here. If we stop using him and stay quiet?
If we report him, are we liable for all the VAT we've claimed for their invoices?

Has the subcontractor been supplying you with a valid VAT invoice?

 

[Karimbo]

Not CIS.

When I tried years ago to check a VAT number the only response was yes this is a valid VAT number.. Now you can get business details but thats not always been the case as far as I'm aware.

This is pretty poor on your part, not checking the VAT. I used to have events company and it was a bit of a pisstake, some companies wanted our UTR and VAT number on their system. They even wannted to check my right to work (passport details). Which was quite annoying.

 

[JEREMY HAWKE]

To @JEREMY HAWKE and @Mark T Jones comments, I didn't check VAT numbers in the past and it cost me into the hundreds of thousands to put it right.

If someone has done this to me I will go round there myself and kick their ass

 

[Speed1972]

Has the subcontractor been supplying you with a valid VAT invoice?

Yes, Just with what looks like a made up VAT number.

 

[MyAccountantOnline]

Yes, Just with what looks like a made up VAT number.

I'm puzzled.

You say 'obviously we've been claiming this VAT back' and have checked the VAT number is valid yet say it looks like a 'made up VAT number'?

 

[lesliedocherty]

Who checks a VAT number when paying an invoice?

• come on dont pretend that you do . Yes someone on here are going to say they do there is always one

Yup, never once in 20 years have we checked

 

[AlanJ1]

Yeah same here, not something I check.

 

[Gyumri]

We suspect one of our sub contractors is not VAT registered

You'll have to refuse to pay the "vat" on the sub-contractor's invoices going forward until your suspicion is dealt with by HMRC.

If they give you the thumbs up then fine. If not, then you'll have to refund the input "vat" that you've been claiming by submitting an error and correction form to rectify your vat position.

 

[MikeJ]

"Hi, we've been doing a routine audit of the VAT numbers we have on our system and yours doesn't seem to tie in to your company. Can you confirm this is the correct number please?"

 

[Gyumri]

"Hi, we've been doing a routine audit of the VAT numbers we have on our system and yours doesn't seem to tie in to your company. Can you confirm this is the correct number please?"

That won't help the OP. If his suspicions have been raised then he needs a thumbs up from HMRC.

 

[Ziggy2024]

That won't help the OP. If his suspicions have been raised then he needs a thumbs up from HMRC.

HMRC won't give you a "thumbs up" or indeed deal with this issue other than giving advice. MikeJ has given a good answer here.

The answer has been given:
1) establish if this is a mistake (typo for example)
2) correct the input VAT claim if needed
3) discuss with the supplier about a refund (again if appropriate)

You have to ensure that your VAT obligations have been met. If the VAT charged on the invoice was invalid then you have no right to claim it as input VAT. Staying quiet is not the right thing to do and you could end up in more trouble then the supplier!

 

[neilsolaris]

I wrote a program using Python, which checks that all our VAT registered suppliers match the record held on the Gov VAT checking website. It can get through about 100 records in 30 seconds. We have a self billing scheme for most of the suppliers, so it's quite important we check.

 

[Gyumri]

Check a UK VAT number

Check a UK VAT registration number is valid. Prove when you checked a number.

www.gov.uk

 

[HFE Signs]

After a quick Google search, you can report tax fraud here: https://www.gov.uk/report-tax-fraud