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Please help. Just had a demand for £3,000 VAT

(35 Posts)
crossandperplexed Wed 14-Nov-12 22:01:15

I have NCd for this as I would be recognisable by anyone I have worked with.

I worked in an NHS Trust for 12 years, until 3 years ago.

I set up and ran various projects. I raised all the funding for my work from charities and private companies.

I paid the Trust my gross salary, plus employer's NI and pension contibutions, my NI and pension contributions every month. They paid me a net salary from that money. So - I paid the NHS Trust roughly £1200 a month from the money I had raised and they paid me roughly £600 net once all deductions had been taken off. I also paid all fees to various departments that were incurred as part of the projects/trials, and have written receipts for everything (eg all lab fees, Xray fees, transport, stationery, overheads etc)

Today I have had a demand for £3000 VAT to be paid to the Trust immediately. I haven't worked there for 3 years.

They owe me £3000 for work I did for them on a specific project for the R&D department. I have given up trying to get them to pay me this money. I was head hunted for a better job elsewhere and I took it. (Actually they owe me a lot more, but I agreed £3000 because it wasn't worth the hassle and stress of arguing with them).

Please, can anybody advise? I cannot afford to pay this money.

Thank you.

MrAnchovy Thu 15-Nov-12 20:06:52


The underlying nature of these arrangements is probably quite difficult to fathom out, particularly if you have in the past arranged for the settlement of invoices which were addressed to you personally. Have you contacted them yet?

Oblomov Thu 15-Nov-12 16:48:50

I too, like Ceeveebee, totally agree with Mr Anchovy ( can't think of a time when anyone hasn't agreed with Mr Anchovy, because he speaks sense) and think this is all justa bit of a mess that has ben highlighted by a VAT inspection.
It so sounds like a VAT inspection scenario, and I have had a few, infact had one yesterday.
Hope you can get this sorted OP. Try not to worry.

crossandperplexed Thu 15-Nov-12 16:23:53

I have checked today, and the "departmental pot" I mentioned was, and is, set up as a research trust - has been for years, long before my time. This was with the agreement of the R&D department.

The reason the VAT demand has come to me is because I was the person sorting out the payment of bills as I was effectively project manager.

ceeveebee Thu 15-Nov-12 14:14:44

I agree with everything MrAnchovy says (as always).

I suspect they have had a VAT inspection and had a demand of their own which they are trying to recover from "customers".

Only the whole set up was a complete mess in the first place.

MrAnchovy Thu 15-Nov-12 10:08:23

I think it is just a ruse to get money TBH.

No it's not that - they would have to pay this money over to HMRC anyway.

What I think it is, is a huge cock up that they are trying (and failing) to sort out. You see it should never have happened that you were receiving donations personally and paying them over to the Trust, or that the Trust was invoicing you for these donations. What should have happened was that the donations should have been made directly to the Trust. There would have been no VAT on these donations because donations are not payment for a VATable service. The Trust could then have allocated them directly to your research account against which they would have charged your salary, overheads and x-ray etc. costs; there would have been no VAT because this would have been an internal supply.

What I suspect has happened is that the Trust has had a VAT audit and the auditor has said "These invoices you sent to crossandperplexed should have had VAT on them because they (or part of them, perhaps just the overheads or the departmental costs) are a supply of VATable services"; this is because they didn't have the right paperwork in place at the time to treat them as charitable services (because you are not formally set up as a research trust, although that's effectively what you were acting as).

But that's their problem, and you should (pleasantly) tell them that.


picturesinthefirelight Thu 15-Nov-12 09:34:49

So really it was your department - not you personally who would be responsible anyway.

It sounds like somewhere someone had made a huge mess of the finances and has panicked! Not your problem.

crossandperplexed Wed 14-Nov-12 23:12:32

ARRGGHH. Just wrote a long post and it dissappeared.

All research grants and funding from various donors/companies came into the departmental "pot".

I managed the funds and paid all of it back to the Trust finance dept by way of various amounts, all invoiced to my department by the Trust and documented and receipts issued to me.

So, "my" dept would get an invoice from the lab, the pharmacy, the Xray dept, the R&D dept, the payroll. Each invoice would be for tests, services, salary recharge R&D fees, plus "overheads" of between 25% and 40% of all the funding income to the department which I then paid to the Trust.

So, the Trust made between 25% and 40 % profit on every project I set up and ran over the 12 years I worked there. My salary did not cost them a penny.

Not one of the invoices mentioned VAT.
Everything was invoiced at Research rate/tariff.

I think it is just a ruse to get money TBH.

Anyway - I am really grateful for all your advice. I must go to bed, but I will follow this up tomorrow.

Gomez Wed 14-Nov-12 22:57:02

And CVB has a far more professional way of telling them to whistle smile

Gomez Wed 14-Nov-12 22:53:48

Sorry what I meant was did you pay the say 1200 invoice or did the Welcome Trust for example?

And they then followed up with a salary payment.

ceeveebee Wed 14-Nov-12 22:53:29

My question about whether you are/were VAT registered was because if you are, then you would have been able to pay this VAT bill and then claim it back so would not be any loss to you. As you are not registered then you of course can't claim this back

I would write back to them, and say

"Thank you for your letter etc

As your original invoices (include dates and reference numbers) did not include show all the information required on a VAT invoice, the amounts that you have charged me must have been inclusive of any VAT due. Therefore please issue me with a credit note against your recent invoice (date & reference)"

I could give you a case reference as I know there is a ruling about this but I think it's best to keep it simple at this stage (and also I would need to look it up at work).

I am off to bed now, let me know what happens

Gomez Wed 14-Nov-12 22:51:38

But all that aside thinking about it if they should have charged VAT at the time and didn't - unless the invoice stated excluding VAT- you can tell them to whistle.

I tried to check online but HMRC system down so do check tomorrow, they have a general enquiry number.

TeamEdward Wed 14-Nov-12 22:51:17

Message withdrawn at poster's request.

crossandperplexed Wed 14-Nov-12 22:50:54

Sorry gomez, can you explain what you mean by "did you pay the funding sources"


crossandperplexed Wed 14-Nov-12 22:49:46

I paid the invoices on behalf of the department in which I was working as a researcher.

crossandperplexed Wed 14-Nov-12 22:48:20

Sorry, loads of typos and a sad that randomly got in there.

I am very tired and have had a small wine to help with the shock.

Gomez Wed 14-Nov-12 22:46:37

And did you pay the invoices or the funding sources?

picturesinthefirelight Wed 14-Nov-12 22:45:47

It sounds a very cock eyed system.

Gomez Wed 14-Nov-12 22:45:14

Sorry x-posts. It is not you who would be VAT registered but them.

However I am not sure that you can be held liable for their error.

crossandperplexed Wed 14-Nov-12 22:42:21

Yes to remittance advice and to P60 and P45. I also insisted on receipts for every payment I made to the Trust. Also had payroll number.

crossandperplexed Wed 14-Nov-12 22:40:49

The invoices for overhaeds would saysadfor example)

Xray for pt 1, 2, and 3 as part of protocol for Trial ...... @£600 per pt Research Tariff, £1800.

No Vat mentioned ever in the 12 years I worked there..

Trusts have 3 tariffs for any investigations/procedures;
NHS rate
Research/clinical trial rate/
Private health care rate.

Only the Private rate has VAT added and this is charged to the customer/insurance company.

Gomez Wed 14-Nov-12 22:40:01

If they invoiced you they should have charged VAT on those invoices. It all sounds slightly bizarre however. So in effect you were both a supplier and an employee?

If you received a pay slip did you also receive a remittance advice for the invoice?

Did you have a payroll number and receive a P60/P45?

crossandperplexed Wed 14-Nov-12 22:36:16

Their invoices to me just stated "Salary recharge for researcher". No mention of VAT anywhere.

I am not registered for VAT, never have been.

Basically - a particular department in the Trust wanted to do some clinical research, but the Trust would not fund any staff. So the Head of Dept managed to raise some funding from various places - Grants, pharmaceutical funding etc, and the Trust agreed they would pay me a salary, as long as the gross salary plus all expenses were first paid to the trust, as I have described.

ceeveebee Wed 14-Nov-12 22:32:01

Sorry - and what did their other invoices for overheads etc say?

crossandperplexed Wed 14-Nov-12 22:31:36

Sorry ceeveebee - your post crossed with my post - I will read yours carefully and see if I missed anything.

ceeveebee Wed 14-Nov-12 22:31:18

What did their invoices for £1200 say?

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