New queries, issue 4244

Distressing VAT

Our client is a limited company. It had a VAT inspection in April 2008 and the VAT officer alleged that sales which had previously been described as zero-rated exports had not met the necessary conditions and should be standard rated.

The VAT assessment of £40 000 was paid by the company which then managed to recover the full amount from the party arranging the exports who accepted responsibility for errors in paperwork.

I appealed against the assessment and after quoting from HMRC’s Notice 703 the department agreed that we were correct and the £40 000 was refunded to the company in February 2009.

The export agent subsequently requested the refund of the £40 000 he had previously paid to the company.

However my client had incurred costs and refused. In September 2009 he agreed to refund £8 000 to the agent ‘in...