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Disappearing VAT

29 March 2011
Issue: 4298 / Categories: Forum & Feedback , VAT
A company paid £10,000 in cash for building work, presumably to avoid a ‘VAT surcharge’ for a non-cash payment. The builder has now settled outstanding VAT liabilities with HMRC and the company wishes to recover the VAT element

Last year a company client incurred some building works for its business and paid £10 000 in cash. Although the client was not offered an alternative price for payment by cheque with hindsight the director accepts that there was probably a ‘VAT surcharge’ for a non-cash payment.

Soon afterwards I discussed this with the director who latterly realised that because the company was VAT registered it really would not have mattered had he paid the VAT as it could all have been recovered.
This was brought back to mind because the director has heard on the grapevine that the builder has been investigated by HMRC and has settled his VAT liabilities in full. This means that my client’s £10 000 payment has now been accounted for as approximately £8 500 plus £1 500 VAT.

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