Readers’ forum: Polish payments

I have a UK-based client in the automotive industry who supplies services but not goods. It has come to light that for the past five years (since January 2011) the company has been invoicing a Polish company for services that were relevant to a UK customer company (a subsidiary of the Polish company). The reason for this approach was because the UK company had cashflow problems and could not afford to pay the bills. But the UK customer has now asked for all future invoices to be made out to itself again (cashflow has improved) and this started to happen last month.

Do we have a problem with past VAT returns? It seems that my client’s customer has always been the UK company. The invoices raised to the Polish customer did not charge UK VAT because the Polish VAT number was quoted on all sales invoices and the...