Readers' forum: Good faith

I recently visited a prospective new client and it turned out that they had paid more than £400 000 plus VAT in good faith to a supplier who was supposedly VAT registered. After a VAT inspection it has emerged that the supplier was not registered but had invented a VAT number for their invoices.

The supplier in question is a family associate to the prospective client who out of interest is keen to know the answers to a few questions. First will HMRC seek to recover the £80 000 of VAT paid by the potential new client because they did not have valid VAT invoices? Could they argue they had acted in good faith? Second would HMRC seek to recover the £80 000 from the family associate who has raised invalid VAT invoices? If so what are the possible consequences for them?

Query 19...