VAT

Discussion in 'Accounts & Finance' started by Advisor1, Aug 9, 2019.

  1. Advisor1

    Advisor1 UKBF Contributor Free Member

    40 10
    Hi

    Can anyone help?

    We have a client who repairs vehicles, is VAT registered, and gets work from an insurer via an Accident Management Company (AMC)

    He invoices 100% of the repair amount and then gives 15% away in sales commission to the AMC

    All transactions are VATABLE

    However, because the insurer cannot recover the VAT, he has been asked to reduce his invoice to 85% of its value and not paying the commission to the AMC

    This means that the insurer saves 3% on the VAT

    If he agrees, is there any comeback on him?
     
    Posted: Aug 9, 2019 By: Advisor1 Member since: Jun 21, 2010
    #1
  2. Mr D

    Mr D UKBF Legend Free Member

    15,606 1,719
    So long as he charges VAT as he should and AMC is happy, cannot see how there would be comeback.
     
    Posted: Aug 9, 2019 By: Mr D Member since: Feb 12, 2017
    #2
  3. consultant

    consultant Your Business Community Staff Member

    5,426 751
    Are you saying he puts his prices up for business that comes from the AMC?

    His cost is the cost. VAT is not his to play with and he has to charge it by law.

    Reducing his price comes off his bottom line.

    What agreement does he have with the AMC?

    Do you think if the insurance company magically could manage VAT they would let him put his price back up?

    Would the insurance company guarantee to give him more business if he did this?

    BTW, he isn't 'giving 15% away', he is paying for the business!
     
    Posted: Aug 9, 2019 By: consultant Member since: Jan 21, 2008
    #3
  4. Advisor1

    Advisor1 UKBF Contributor Free Member

    40 10
    He reduces his price for business that comes via the AMC (by 15%) so that the Insurer, who cannot recover the VAT, can reduce their VAT liability

    Currently he charges 100% and then gives 15% to the AMC. This 15% equates to @ £300 per invoice for the AMC.

    Under the new system, the AMC gets paid far less from the insurer for each job.

     
    Posted: Aug 25, 2019 at 2:36 AM By: Advisor1 Member since: Jun 21, 2010
    #4