VAT payment withholding - security staff supplier

The Client

Security staff supplier.

Value of Dispute

£150,000

The Commercial Dispute

A client specialising in the supply of security staff to businesses across the world was approached by a competitor who wanted to utilise their extensive network of operatives. The competitor’s intention was to tender and secure work from a major supplier of athletic shoes and apparel manufacturer in the USA. This supplier had security requirements for its operations in France and Israel; areas in which the competitor did not ordinarily operate.

Whilst the competitor paid the client’s invoices, they unlawfully withheld payment of VAT.  This meant that the client was liable for repayment of VAT to HMRC, but had yet to recover it from the competitor, creating a large and immediate cash flow liability. 

How Escalate Resolved – Services Used

Escalate was provided with correspondence from a solicitor who was already engaged by the competitor on its behalf to liaise directly with the client regarding the VAT payment issue.

The solicitor had attempted to suggest that because the service provided to the competitor fell outside the scope of UK VAT, our client was precluded from recovering VAT from the competitor.

Escalate obtained formal tax advice from trusted partners, who confirmed that the competitor’s legal argument was flawed and destined to fail. Escalate articulated this position to the competitor’s solicitors, who conceded defeat and agreed to payment in full. Within one month of instruction, we had received the full sum of £150,000 for our client.