BestOfBid.com - VAT Exemption mistake, need to reclaim VAT from client?

VAT Exemption mistake, need to reclaim VAT from client?

I have been working with a single client for the last 5 years as an independent IT consultant. I am VAT registered. They told me at the beginning to make all my invoices VAT exempt as there funding was from government money. They have since informed my at the end of this years contract that this is incorrect or at least the last three and possibly five years should have had VAT on. I have informed the Inland Revenue who have so far done nothing. I am trying to re-invoice the client for all the VAT but they are only promising to pay this financial year as they are funded by different organization each year. If I have to pay 5 years worth of VAT for money I have never had I will go under and probably be bankrupt. Advice is sketchy and I really need help

Public Comments

If you are registered it`s down to you to charge the vat, at the end of the day you are liable.
You have to make sure you facts are a true as you can, contact the IR or VAT people when you are sure. They should give advise on what to do next. But before you do go down that road, try Citizens Advice, they have a staff of professionals who should know what you should do. Good Luck.
1 Speak to your accountant, if he is any good he will have this sorted in minutes. Saying that, he should have checked you were invoicing correctly. 2 Phone the VAT advice number.They will tell you what to do. 3 Don't panic, when 2 VAT registered Companies trade - you pay the VAT to HM Customs, the client claims it back. At the end of the day HM Customs are not losing any money by you not charging it! 4 Your client is misinformed - having to pay the VAT only means a temporary cashflow issue, if you both time it right you can invoice it at their quarter end, they reclaim the VAT amount and they pay you before your quarter end. 5 Seriously don't panic phone the helpline No (on the back of your VAT return) if you have no joy with your accountant. All will be well... All the best Also ask your Accountant if he is a member of CCH or similar then you would have access to their excellent advisors.