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Is it legal for a business to refuse a VAT invoice?

Q. I have received the following email from my broadband provider:

“We need to let you know about an important change to your Plusnet bill.

From our records, we can see that the bill you currently get splits out the VAT amount. From 1st September, your bill will show a VAT included amount, and it won’t be shown separately. This is because you’re currently on a residential product, and VAT bills will only be available to customers on a business product.

If you’re happy to continue with your current products and get our standard residential bill, then there’s nothing you need to do. You’ll see the change on your first bill after 1st September.

However, if you do need a VAT invoice for business purposes, then we’d recommend opening a new Plusnet Business account.”

Is it legal for a business to refuse VAT invoice for certain types of customers? They could have set up a separate business that’s below a VAT threshold just for residential customers but I doubt that’s the case. Is it possible to check such scenario?

A. Under Article 13 of the VAT Regulations 1995 (SI 1995/2518) a VAT registered business is required to supply a proper VAT invoice when requested to do so by a VAT registered customer.

Amongst other things a proper VAT invoice should show the VAT as a separate charge.

As you require a proper VAT invoice to reclaim VAT then all I can suggest that you respond to your supplier advising that you are a VAT registered business and thus they are required to issue you with a proper VAT invoice, quoting the above legislation.

However, the issue here is the fact that, according to their email, the current product they provide is a “standard residential product” as opposed to a business product and they will only continue to issue proper VAT invoices to those customers using a business product.

From a VAT legislation point of view the nature of the product they supply doesn’t alter their requirement to issue a VAT.

However, it may be that, if the customer is a business, the supplier’s Terms and Conditions allow them to force that customer to change to a business product, which may be more expensive than the residential product. This may therefore be something that needs to be taken into account but that is a matter between them supplier and their customer and something that we cannot comment on.

This answer was provided by Qdos Vantage.

By Contractor Doctor


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