Vat charged at incorrect rate

T

Tomorrow

Registered User
Messages
187
Hi there

I am hoping someone can help me.

We have an issue that the incorrect vat rate was charged by a client for approx 2 years. It appears he charged 21% instead of 13.5%.

Now, his bookkeeper has told him that he can get this back, however my understanding is that he must refund refund the overchaged vat to his customers.

I am looking for some reference to back up my belief. I have read through the VAT act and cannot see anything specific. Revenue have confirmed what I believe but seem unable to provide a reference, although I am sure if I put it in writing I would get the appropriate response, however my client wants this sorted asap

Many thanks for your help
 
A company we used to deal with also charged us 21% instead of 13.5%. When the chap I worked with realised the error he contacted the company who agreed to go back through all our bills (3 years worth) and refund us the difference.

As far as i can see if your client gets this tax back he must refund you. Why would he keep it, since it;s yourself that has overpaid the money. He can't benefit from this.

Could you get something in writing from the Revenue to back this up?
 
Again I don't have anything in writing but the VAT charged and collected by the VAT Registered Person does not belong to the VAT Registered Person - they are basically a collector for the Revenue. Your client could look for a refund from revenue but he would also need to refund the VAT back to his clients as it is not his money
 
By law, he needs to reissue all incorrect VAT invoices, amend all affected returns and claim a refund from Revenue (He has paid over 21% instead of 13.5%).

You will need to amend all the affected VAT returns and pay any amount o/s (you have claimed 21% instead of 13.5%).

Obviously, your supplier will owe you a similiar amount (to that which you owe Revenue).

By doing this, Revenue attention will be drawn and it is very likely that your supplier will be audited.

Remember, don't do any adjustments on your side without valid amended purchase invoices. If he gives you any problems, just give his VAT number to Revenue.
 
Paddy199 said:
By doing this, Revenue attention will be drawn and it is very likely one of the parties will be audited.
Click to expand...

This isn't necessarily true - in fact I don't believe it is true at all, unless perhaps the adjustments in each of the affected entities' VAT returns are so large in the context of their business to distort their VAT record.

Even then, the Revenue audit selection system (known as REAP) is sophisticated and takes a wide range of 'risk factors' into account when highlighting cases for audit, so its perhaps a bit naive to expect that one particular VAT return adjustment would automatically propel a business to the top of the audit priority list, if they are generally tax compliant and their tax record and trading patterns have no other unusual aspects.
 
AFAIK the REAP system merely produces a list of possible audits but the finals election process is manual
 
But adjusting your VAT returns for 2 years would propel you right to the top. And if he was charging the incorrect VAT rate here, he was obviously doing it accross the board, the amounts may be significant for him.

Also, there may be a risk that he wasn't returning the difference.
 
You must log in or register to reply here.
Back
Top