Issued a VAT invoice but the customer didn't pay the VAT

What's your business name got to do with anything? If you were operating as a business then you need to invoice them with VAT added unless they give you a VAT number. Anything else on their part is just them trying to rip you off. Who did you make the invoice out to?

If they refuse to pay the bill in full, is there nothing can be done to encourage them where you don't lose out? Sue them for non-payment?

No you are not entitled to do that. If you are VAT registered and have provided a VATable service or VATable good to a customer in Ireland you must charge VAT. They are simply refusing to pay from my reading and you should sue.

Honestly CramCycle, I sympathise, but you cannot do that. If they are established, VAT registered and are doing this to you I would describe them with a 4 letter word begining with s and ending with m. They are completely aware of what they are doing and it amounts to theft.

You cannot issue an invoice without VAT, the question you must ask is what did I sell them and is that Zero rated or VAT exempt? Did you sell them zero rated foodstuffs like vegetables? Did you provide VAT exempt services like insurance or Medical care? If not you must charge VAT. The only recovery you can get is to write off the balance owed by a credit note whereby you can recover the VAT amount of the portion unpaid, or sue for the full amount.

The other way is to buy something from them and not pay.

No you cannot issue an invoice stating ex vat.

Basically if you’ve issued an invoice for €1,000 plus vat at 23% you are owed €1,230.

If your customer have now paid you €1,000 then they still owe you the €230.

You cannot tell revenue “they didn’t pay the vat, sorry about that.” Of the €1,000 they have paid you, you now owe revenue the vat portion of that money. So effectively your customer have paid you €813.01 for the service you provided plus €186.99 in Vat (23% of €813.01). You now owe revenue this €186.99.

Your customer still owes you €230 which when you collect that is broken down as €186.99 for you and €43.01 for revenue.

There are certain circumstances where a company are exempt from vat, such as if over 75% of their sales come from sales outside of Ireland. In this circumstance revenue would have issued them a Vat 56B number which they should provide you with and you put this on the invoice which then allows you to show their vat rate as 0%. But I highly doubt this is the case or they would have provided you with this information as they would be used to doing that for all of their suppliers.

What I would do first is issue them a statement showing the payment they gave you and stating what the remaining balance on their account is and see what the reaction to that is first before taking any more drastic action.

The fact they are VAT registered and could just claim back the VAT paid over to you on their own next VAT return is the most confusing part of all of this

i think your going about it the wrong way, don't issue a new invoice.

if they are vat registered they should not care that vat is added as they can claim it back, but by not paying you and claiming back the full vat amount they are getting the work at a discount.

if you issue them a second invoice they might try to claim that back as well?

pay the full vat on the invoice to revenue, it's only a small difference (€43) take the hit in the short term and claim back the vat and write it off as bad debt at the end of the year and never do business will them again, you were told of issues with them before you started by others, most business won't say bad things about other business as they can be sued and they have assets to lose, so if people are warning you it tends to be true.

From chat gpt on this, (I'm not an accountant and nether is chatgpt)

In Ireland, VAT is generally based on the invoice issued, not the amount the customer actually paid. When you issue an invoice for goods or services, the VAT is usually applied to the total amount of the invoice, and this is what you are required to report and pay to the Revenue Commissioners.

However, in the case of bad debts (where you are unable to recover the money from your customer), you may be able to claim relief on the VAT element of the bad debt, provided you meet certain conditions set by Revenue. These conditions include that you must have already paid the VAT to Revenue, the debt must be written off in your books as a bad debt, and the debt must be over six months old but less than four years old.

Please note that this information is accurate as of my last training cut-off in September 2021, but the rules may have changed after that time. For the most accurate and up-to-date information, you should consult with a tax professional or directly with the Revenue Commissioners in Ireland.

....work was consultancy, our business name is after our family home with the word farm in it). I am VAT registered but they just want to pay me the amount and not to the business...

Probably easy to fix OP.

Is your vat registration number in your personal (sole trader) name or a registered limited business name (home + farm) ?

If you personally are on a list of their approved suppliers and the invoice you issued is from the name of the farm, their system will flag it. They are not paying the vat portion until that is resolved.

Could you re-issue the invoice as Mr CramCycle t/a HouseNameFarm? That should work for them.

What is?

OP said he is registered for vat. Maybe he has a website in the farm name. Maybe he doesn't have the business name registered. Maybe it is/isn't a limited company.

If he's a sole trader and has registered the business name why can't he invoice that way?

Because to do so would be a deliberate evasion of the duty of a VAT registered person to account for VAT on their invoicing, that is why.

Where did I say to issue an invoice without showing or charging vat? You have some cheek posting here that I was suggesting anything dodgy.

The original invoice was paid net because it sounds like the approved name on the customer system didn't match the name on the invoice. The OP is vat registered in his own name and if he has a registered business name he can issue invoices from that business. If the customer is refusing to pay the vat element because the vendor verification doesn't match, then OP needs to issue the Vat invoice in the correct name.

I never mentioned issuing a credit note or invoicing without charging vat. You seem to be mixing me up with someone else.

Intra EU?

Is the customer not in Ireland?

There are a few circumstances where you either 0 rate the invoice (place of supply is EU), charge no VAT (place of supply outside of EU) or the purchaser does not pay VAT to the supplier VAT 56.

You should probably run it by your own accountant or tax advisor, asking these things on a forum which is answered by random people (however well meaning) is unreliable.

No offense, but "excellent" is your own opinion based on you not having the complete information regarding VAT legislation.

And you haven't given the complete information either.

And further, it doesn't sound like you have received complete/accurate information from your customer either.

I have said there are tax compliant reasons why a company may not expect to pay VAT on your invoices, I suspect you may have this issue again in the future and you haven't really dealt with it, and it seems like you are souring a potential repeat customer assuming they are trying to defraud you.

It is highly unusual for VAT numbers to be checked against VIES in domestic VAT processing and for the customers accountant to reject your invoice and to suggest to help you create a correct version, they must have had a basis for doing so.

There is no benefit to this other company (assuming they are conducting a Vatable activity, they just reclaim the VAT on the invoice).

Anyway, I actually think an awful lot of what your approach is naive, I deal with a lot of people who are adament they are capable of DIY tax, until they are proved wrong and cannot find the answer....btw I see errors and risks in the information you have given (tax and business).

But yes, let's leave it there!