I've just bought some goods from a company who is NOT VAT registered, yet they charged me VAT.

Is that allowed? Everything I've read says it is not.

Anyone know more than me?

In a word, No. Unless you are VAT registered, or have applied for VAT registration and are awaitng your registration number, you must not charge vat to your customers

Many people new to business do not understand vat. They think becaue they got charged vat on an item they then resell, that they can also add the vat on. You can't.

The only other reason, apart from blissful ignorance on the matter, is fraud - a way of making extra money that will not of course, be sent on to the vat man as a tax collected.

When you make a payment you should always request a vat receipt or invoice. If you suspect they are not vat registered and have good proof of this, or perhaps they are not sending you a vat invoice when requested to do so, leads you to believe they are not vat registered, tell them you will be contacting HMRC with said invoice. That should do the trick and get you a refund and a non-vat invoice/receipt or you can take action and report them. I would do the latter anyway, because they will be doing this to others, whether with intent or not.

It could also be that they are in the process of registration, are awaiting their number and of course as soon as you have sent off your vat reg form giving the date you intend to start charging vat, then you should start charging it from that date, and your reg confirmation and the reg number arrives some weeks later. You don't wait until your vat registration confirmation/number arrives before you start charging vat.

You should in fact, make reference on the invoice to the fact that vat registration is in process then when you finally receive your reg number, you should re-issue those invoices to the customer, but with the number on it.

Any website stating any prices with '+ vat' inferring they are vat registered, should state their vat registration number on their website. Almost nobody does this though I dont think there is any come back if you don't. But at least you stay transparent.

You see, this is why I love you! This is exactly what I thought. I just wanted to be clear.

I know this reseller is just trying to make extra cash out of me, which is pretty abysmal (same person I've been having all the problems with).

Thanks for posting this great answer :)

Demand the vat element back as a refund, get it back (hopefully) then send a copy of the original invoice to HMRC and say you suspect they have charged others in the same way. They will investiagte.

I think for any item over £50 where vat is charged, the invoice has to show the amount of VAT charged, plus of course the VAT reg no, which incidentally can easily be checked with the VAT office.

Interesting! He's now trying to say that the VAT was deducted from the actual price and that the price + VAT was the REAL price and he can't refund the VAT because he'll be out of pocket.

What would you do in a situation like that?

Don't people learn the basics of business before they start trading?

What he should have done is charged you the full amount including the VAT, but the vat amount should not have been shown on an invoice unless he is vat registered.
i.e a vat registered company would send you an invoice showing the vat (£100 + vat = £117.50). On the other hand a non registered company should show no vat on an invoice, therefore still £117.50. As he is not vat registered you have a legal right to demand a refund on the vat and could also inform the HMRC.

Yeah, it's as I first said, he thinks he can add the vat on simply because he had to pay for it. Which he could have done, like Mayfield says, if charged at that full amount. But charging the net and stating + vat has caused him to lose out.

How much was the vat element for? Was it much? There is no proof he has done what he says, that his excuse is his genuine mistake, he could still be using that chestnut to fob you off.

Oh I have absolutely no doubt that he is fobbing me off, as all the initial paperwork had prices without mention of VAT. We agreed on a price and the price ended up with VAT, which I had to ask about as they are a new company and I knew there was no way they were VAT registered.

The VAT in this case is about 425 pounds.

I've been told I'm not getting a refund on the VAT as the price should have had the VAT included.

OK so tell them you are making a formal complaint to HM Revenue & Cutoms. If they are not vat registered then the price they gave you which was net of vat, should be the price you pay, end of.

OK so tell them you are making a formal complaint to HM Revenue & Cutoms. If they are not vat registered then the price they gave you which was net of vat, should be the price you pay, end of.

http://charterconsultation.hmrc.gov.uk/manuals/chmanual/CH91350.htm

Thanks for that, very useful! :)