VAT Alert for Housing Association Sector - AllPay Bill Payment Services
A range of our Housing Association clients have been in receipt of additional invoices from AllPay to recover VAT which the company had not been accounting for on its supplies of payment services.
The VAT internal management of AllPay is not an area we can comment on but it is clear that the company has received a liability ruling from HMRC to advise that, rather than qualifying as a VAT Exempt payment handling service, AllPay should have been charging VAT on its services in this regard.
As VAT sensitive bodies, associations bear VAT as an addition cost therefore it is important to establish your contractual arrangements with AllPay in regard to the consideration value you agreed to pay for the services, before you process these additional invoices.
AllPay will be obliged to account for the VAT they have under declared out of the monies they have already received – i.e. payments will be treated retrospectively as being VAT inclusive. In asking for addition monies from the sector it must be clear whether your contracts with them enable this to be done. The wording of correspondence seen from the company infers that the customer has the legal obligation to pay the VAT request which may not be the case depending on your contract and definition of consideration within it.
Contact Julie, Andrea or Liz in the team if this is a concern.