Tax point & contract law

Troy Steadman · 2004-10-31T08:37:01+00:00

These are the circumstances under discussion: Derek wrote: [I was talking to a local one man] haulage contractor who bought a new lorry for say £80,000 + vat. He got a HP agreement for the £80k but was depending on making a repayment claim for the £14k of VAT. Relying on collecting the truck on the 30th of the month. The HP company paid the truck dealer directly. Unfortunately due to sickness at the truck dealers the truck was not invoiced out until the 3rd of the following month, in the next vat quarter thereby delaying his repayment claim by 3 months. His bank would not support him to the extent of an additional 14ks worth of borrowing. As a result he found himself in the clag. I replied:: ?I reckon your haulage contractor was a fool, the VAT point is generally the Invoice date but not neccessarily, not in these circumstances. The day he took delivery is arguably) a better tax point. Nogood Boyo replied Aren't you familiar with the tax point rules..? If not, why do you post on the subject..? I am saying that: you are wrong when you say "the VAT point is generally the Invoice date but not ... in these circumstances" your notion of adopting "The day he took delivery" because it's "better" is quaint but unsustainable. I suppose I'd better quote chapter and verse... No, sod it. Here's the chapter, read the verse yourself. Notice 700 The VAT guide 14. Time of supply (tax point): introduction and general rules Okay.. I haven't had a chance to look at your link but imagine you are in a VAT tribunal and arguing your case. I would suggest there is only ever one moment that a sale takes place. If A offers B a horse, B posts his acceptance on Tuesday, A dies on Wednesday, the letter arrives on Thursday, it is difficult to know when or if the sale took place, but there will only ever be one answer ? in this case the sale took place when B put the letter in the letter box. The haulage contractor's supplier has the money from the HP company. He has handed the the...

Oct 31, 2004 23 Replies

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Shano 21 years ago

No, I'm assuming that HMC&E are correct at

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I like then

Regardless of whether or not the HP company's accountant is ill, a VAT invoice can be issued up to 14 days after the supply of goods. This then becomes the Actual Tax Point. The only red herring is that HMC&E simply don't care what the HP company told the haulage contractor, because the invoice was issued legally regardless.

And it's the easiest assessment in the world for a VAT inspector to make to disallow a claim on the basis that no invoice is available to support the input tax. Sure, the client might get a couple of weeks to track down a copy from the supplier, but if it has the incorrect date on it the effect is just the same - disallowed.

Shano

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Troy Steadman 21 years ago

Good grief! Whatever happened to "sense of humour" and "being able to take a joke"?

This was an example of how we think each other are idiots because we make assumptions that are different to the assumptions other people make. VAT isn't *only* a list of rules, it's a group of human beings operating within circumstances which weren't envisaged in the rules...

Sorry I'm forgetting I'm talking to myself.

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Peter Saxton 21 years ago

I dont see why the haulage contractor has to go bust. They should just not send off their VAT return. They could usually delay until the next one is due and their cash flow problem should be solved even if it costs them a VAT surcharge.

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