Pitfalls Of Taking A Long Time To Reclaim

A JONES • Jun 07, 2017

The job in the office today, the build took 6 years, not a problem at all except that they actually spent £120,000.00 (£20,000 vat value) in the first 3 year of the build and only £1800.00 (£300 vat value) in the last 3 years. Had they pushed for a completion certificate 3 years ago, in all probability, they could have obtained one and could have reclaimed the £20,000 in vat at that point. They have held back in order to maximise their reclaim, but in fact, all they have gained in 3 years, is £300.00. Yes, £300 is £300 and that is not really the problem. The problem arises when we go to process the vat reclaim. There are issues with the online electrical company that they purchased their cable and fittings from and also their kitchen company, their window company and their staircase manufacturers. The cable company provided Sales Orders rather than Vat Invoices and this company are no longer in business. The kitchen company provided an invoices lacking enough detail for HMRC to accept in order to reclaim the Vat amd this company has been taken over by a new company and they do not have access to the old companies transactions despite the same staff still working out of the same premises. The window company wrongly charged the client vat, as they supplied and fitted the windows and should have supplied the goods as a zero rated sale but as it is past the 4 year window allowed by HMRC to make corrections this can not be rectified. HMRC will not refund vat that was wrongly charged, irrespective of the fact that they have received this money from your supplier. Finally, the staircase joinery company, Mr. Watkins, has retired and de-registered as a vat registered business, hence, the error can not be corrected. In attempting to gain £300.00, the client is actually, £4945.00 out of pocket. In hindsight, had we submitted this reclaim, 3 years ago, most, if not all of these issues could have been corrected and the money secured for the client.