Member Since: Mar 9th 2018
Mar 27th 2018
I would suggest to repay the debt as VAT is not an ordinary tax and VAT is not company's money. The company collects VAT on behalf of HMRC. The company should not use VAT for any other purposes. Therefore, technically, the VAT supposed to be collected from customers and passed to HMRC. It cannot be deducted by expenses or anything else. So, basicaly, the client has collected VAT on behalf of HMRC and than spent it for something else. This might look like theft...
I would stay within the law and if the client has other plans, let them go. People don't realise that director is personally responsible for everything they do through their company. And when audited, the answer that my accountant/agent/colegue/friend etc advised me such and such will be far from convincing for HMRC. Some people think that accountant who always agrees with them is the best accountant. In reality such an accountant simply does not care. I would ask which accountant they whould prefer when HMRC knock to their door one day...