Retrospective VAT charge

[Guest HoiPolloi]

Last June I paid for a year's storage in advance with a well know self-storage company. At the time I took the opportunity to negotiate down the charges they initally quoted for renewal (I've been using them for several years now). The negotiation was all done over the phone and no mention was made of VAT at the time.

I am now being asked by them to pay VAT on the charges relating to October onwards. They claim that they had not known the storage charges were liable for VAT until recently when their lawyers confirmed that it was. I've looked on the government web site and see that it was made quite clear when the announcement of future VAT liability was announced in the budget, it was also announced that "anti-forestalling measures" would apply from 21 March, therefore the Self Storage company should have known that there would be a VAT liability. As a concession, the company is only asking for half of the VAT, but this is still a significant sum.

So my question is: Am I liable for the VAT or should the company have known about it and included it in the agreed sum that I paid in June?

Thanks for any help.

[slick132]

Hi HP,

 

It really depends on whether you want to continue to use them for storage and on whether you have an invoice or receipt for the charges agreed in June.

 

If you have an invoice or receipt for money paid in June for the following 12 months, it would specify if you had to pay VAT. If VAT was not specified, than I don't see that they can add it retrospectively. Therefore they should honour the 12 month agreement and they would have to account for any VAT due themselves. They do this by treating the amount you pay as being inclusive of VAT nad pay the VAT element to HMRC.

 

If you want to continue to use the facility form June 2012 onwards, you'll have to pay VAT as required.

 

However, if you fail to agree to pay half the VAT as requested, they may decline to offer you their facilities after the end of May 2013.