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Difficult Client!!

  • 34 posts
  • # 78982

How do you deal with a client that wants to claim back VAT on purchases for before they were VAT reg. I have already tried to explain to her that she can not do this but won't listen to anything I say. Help pleae!
Peasie
  • Member PM.Dip
  • Practice Licence
  • 481 posts
  • # 78983

Do you mean "purchases" in the strict sense of the word in which case they can't, but if you mean in a general sense then they can (subject to certain rules).  If they still have the item (eg office furniture) then they can claim the VAT back if it was within a certain number of years.

If she is trying to claim the VAT back on stock she has bought then tell her you can't remain her bookkeeper as she is commiting an offence which you would have to report under the MLR (without informing her).
kjmcculloch
  • 1159 posts
  • # 78984

You certainly can claim purchases of stock and assets you have bought up to 4 years before registering for VAT provided you still have them, and you can claim for certain services for 6 months prior to registration. I don't have the link (I'm on my phone) but have a look at hmrc site. Hmrc says "The word 'goods' includes goods that are intended for resale, and also goods that you keep as assets, such as computer systems, shop fittings, office equipment and furniture, tills, vans and other equipment. It also covers anything else you've bought that isn't a service, so it includes consumables such as stationery" The link is www.hmrc.gov.uk/vat/start/register/purchases-before.htm It's worth checking before telling a client something that may not be true. If you're unsure just say so and tell them you'll check. Kris

Edited at 31 Jan 2012 12:47 PM GMT
Peasie
  • Member PM.Dip
  • Practice Licence
  • 481 posts
  • # 78985

Actually now you put it that way Kris it would include stock as well as if you are still to sell the stock then you will be charging VAT on it anyway from now on. 
  • 34 posts
  • # 78986

She is trying to claim back expenses that were incurred from January 11 for the like's of petrol etc. But as she runs 2 company's she is trying to include all this in the one that is VAT reg. I have considered giving her up as a client but unfortunately she is the only client I have at the minute and can't really afford to :(
kjmcculloch
  • 1159 posts
  • # 78989

If it were me, I'd sit down with her and go through all the items she wishes to claim for.  I'd seperate them into two piles on her desk, those she can recover the VAT on and those she can't.

Then I'd explain to her that my job was to make sure she makes as much money as possible, and the way I do that is to make sure she claims for everything she is entitled to and nothing that she is not.  I would tell her that the only thing worse than paying HMRC too much is paying them too little becasue this will come back to bite her in the bum with fees and penalties and possibly jail time in extreme cases.

I would tell her that the reason she employs me is for my knowledge and skills in these matters and that if she feels that she can do a better job alone then perhaps it is time we parted company.

I can understand your fear of losing your only client, but sometimes we need to shed the dead weight for the new clients to blossom.  If you spend your life firefighting with her, when are you able to find new clients?

Kris 
  • 34 posts
  • # 78990

Thanks Kris

I have done all this with her but she is tending to take her accountants word over mine (who by the way does not see her books on a regular basic and is based over sea).
  • 3 posts
  • # 78991

janetshemmeldsaid:

“Thanks Kris

I have done all this with her but she is tending to take her accountants word over mine (who by the way does not see her books on a regular basic and is based over sea).”

I am just dealing with this now and have spoken to HMRC yesterday. The goods you reclaim VAT on MUST be in your business at the date that the VAT starts. so unsold stock, tools, stationery etc. A physical item you have.
 You can reclaim services (gas, electric, mobile phone etc) for up to 6 months before date of registration.

Good luck!   
  • 34 posts
  • # 78992

Thanks everyone for the advice. I really appreciate it x
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