VAT Problems - Again

This is an issue I have raised with you before but it urgently needs to be addressed. I am looking at a "High Value" job today and if I am going to submit a bid I will have to spend some time reading through the specification and this is an investment of my time which I do not want to waste. The problem I have is that the buyer is shown as being in the United Kingdom and would therefore be subject to VAT (if the location is correct, which I think it is on this occasion, based on the project description). It is also a fixed price and it is pre-funded. Do I add 20% to the pre-funded price to cover the VAT or do I simply lose £58.33 (one sixth of the project price) by paying the VAT myself? Either way this is not an acceptable situation.

You are taking the "Father Ted" approach by saying the money is simply "resting in your account before moving on." VAT does not work like this. If you are taking money from a buyer you have to charge VAT on the whole amount. Then you pay me, including the VAT, and the system works. Trying to argue that the transaction would be between myself and an anonymous company, who have already paid you a fixed amount, is nonsense. I understand that VAT becomes an extra charge when the buyer is a private individual and are not VAT rated themselves, but when business is conducted between VAT registered companies, it is only a problem when one company in the supply chain doesn't follow the rules.

I also note that a recent forum post was from another person who has an incorrect location listed. You had them listed as being in The Netherlands when they were actually in the United Kingdom. You cannot continue like this. It is very difficult for freelancers who are trying to keep legal accounts. It is likely to be even more difficult for one or more of your directors if ever HMRC catch up with them.