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

[crossandperplexed]

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.

Are you sure it's VAT? Only HMRC can ask for that.

Is it unpaid tax & NI. As an employer they should be responsible for that. We're you employed or a contractor?

Yeah, my first thought is how are they chasing you for VAT, are you even vat registered? Have they made an accounting mistake where they assumed you were and are now looking for some kind of shortfall.

The only people who can demand VAT is paid is HMRC.

I was employed by the Trust, on condition that I raised all the funding for my projects as i described. I have the invoice here:

I actually says;

Total EXc VAT 0 (That is quoted as the salary for 3 months in 2012 that I didn't even work there - I left in 2009, so obviously the salary is 0)
Then it says:
VAT £2, 000 + (Sorry - it is a bit less than £3000)

then it says
Total invoice £2000 +

sorry - have not quoted exact amount, but the salary is 0.

They have calculated VAt on their gross salary invoices for the last 18 months I worked there.

Prior to this I have never been charged VAT on my salary.

I am genuinely baffled.

No I am not VAT registered, never have been.

I was employed, but conditional upon raising all the money from external sources. I funded all the employers contributions and paid NI, pension and tax out of the money i raised. I didn't cost the Trust a penny.

In order for any VAT to be payable to the Trust they would have to have supplied you with a VATable supply I.e some goods or a service. I cannot imagine what they think they have supplied to you! So ring them up and ask. The flows that appear to have occurred are that you were the employee of the Trust. Did you have a contract? Was it an employment contract? You then did fund raising on behalf of the Trust - the funds you raised were, I assume, for the benefit of the Trust.

I am an accountant but not a VAT specialist and no longer practising as have changed career but will try to help!

You paid them your salary? Sounds odd. Do you mean you paid them a sum of money each month from fundraising, that they then used to pay your salary? If so, then the money you paid them could be viewed as income in their own accounts,ie you were a customer of theirs, and if they are VAT registered then perhaps they should have charged you VAT on this income. Does that sound like what has happened? I am not saying they are right to charge VAT as I don't know enough detail about the way NHS Trusts work or what the income was, but that is the only chain of events that I think could resilt in thm demanding VAT from you.

Did they invoice you each month for the £1200 that you paid them? Did these invoices show any details of the VAT registration of the Trust, or any split or analysis showing whether VAT was charged (should show the split between exempt, zero, 17.5%/20% etc depending on the rate at the time).

If they failed to charge you VAT at the time within 30 days of the time of supply, and didn't send you a proper VAT invoice, I think their invoices would need to be treated as VAT inclusive so the £1200 you paid them should be treated as including the VAT already.
www.hmrc.gov.uk/vat/managing/charging/vat-invoices.htm

Are you VAT registered by the way?

The only thing they supplied me with was a payslip each month that I worked there.

They sent me an invoice every month for approx £1200, took off all the employers contibutions for everything, deducted my tax, pension and NI and put approx £600 into my account.

I also paid overheads (for heat, light, use of desk and chair, filing cabinet and shared computer in a shared office, and fees to the R&D department, the lab, the xray department , and any other expenses incurred by the Trust). All documented, invoiced and paid. I still have all the records.

In addition, I taught students, organised training, supported clinical work when needed, all for free.

A few xposts there and a link fail
www.hmrc.gov.uk/vat/managing/charging/vat-invoices.htm

What did their invoices for £1200 say?

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

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

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.

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?

The invoices for overhaeds would say:(for 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.

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.

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.

It sounds a very cock eyed system.

And did you pay the invoices or the funding sources?

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

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

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

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

thanks

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.

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