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Posted Fri, 03 Feb 2023 13:48:46 GMT by DJS
If a historical supplier didn’t charge VAT on their invoices as they thought the service they were providing was exempt, but it later transpires that they should have been charging VAT: 1) Are they entitled to raise a backdated VAT only invoice to their clients? 2) Does the client have to pay the VAT only invoice? 3) Can the client reclaim the VAT only invoice as input VAT? The period the original supply and invoices relate to is between 2014-2017.
Posted Fri, 03 Feb 2023 17:51:16 GMT by Jason Croke
Depends on what the contract said (ie, did the suppliers contract states that the price was VAT inclusive or exclusive?) The customer is not obliged to pay the VAT only invoice (subject to the answer for point 1), it is more a matter of contract law than VAT, in effect, the supplier is changing the price they originally quoted. The customer can reclaim VAT on this backdated VAT only invoice, subject to the usual VAT rules, that is, purchase was for the business and the business can reclaim it's VAT (ie, if it's for a hot tub for a Directors home then its not a business purpose...and if the business is partially exempt - like a charity for example - then it may not be able to reclaim all of this VAT), but if the customer is a taxable business that can reclaim it's VAT then the VAT is recoverable. If the customer can reclaim VAT then might as well allow supplier to issue VAT invoice, customer can reclaim it so no overall loss to anyone, if the customer cannot reclaim their VAT because they are not VAT registered or partially exempt, then might require a conversation with the supplier as the contract may or may not allow them to issue VAT invoices at a later date.
Posted Mon, 06 Feb 2023 11:49:50 GMT by HMRC Admin 17

Hello errors on invoices can only be corrected going back 4 years please refer to :

How to correct VAT errors and make adjustments or claims (VAT Notice 700/45)   .

Thank you.
Posted Mon, 06 Feb 2023 15:37:52 GMT by DJS
Thanks for the response , very useful. @ HMRC Admin 17 - does the 4 year rule apply if the new VAT only invoice was dated and received only last year 2022? The guidance appears to state its from the date the invoice was received. "6.1 When are you entitled to claim input tax The time limit described in paragraph 4.7 for deducting input tax starts to run from the due date for the return that you’re liable to make after you have both incurred the input tax and received the associated VAT invoice."
Posted Tue, 07 Feb 2023 13:52:51 GMT by HMRC Admin 17

The invoice date should relate to the original tax point date please refer to notice 700 section :

VAT guide (VAT Notice 700)    .

Thank you.
Posted Wed, 08 Feb 2023 10:04:58 GMT by DJS
Thank you for your response HMRC Admin 17. So based on this, am I right in thinking the supplier needs to inform HMRC by writing to the VAT Written Enquiries Team requesting an extension of the 14 day rule. If the 14 day rule is agreed, an invoice can be issued with a current tax point date, and this can then be reclaimed as input VAT by the client.
Posted Fri, 10 Feb 2023 14:54:33 GMT by HMRC Admin 32

Yes, the supplier would be required to write in.

Thank you.

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