What to do when told to pay VAT due on a completed purchase

This morning, quite a few iOS users were surprised to receive an email from Squirrels LLC informing them that their “government requires VAT to be paid on all purchases”, so ‘needing’ them to pay VAT on previously completed purchases from them.


Apparently, quite a few people paid up without asking any questions. This was probably because the wording of the message implied that this was a legal requirement imposed by the government of an EU state. In truth, the email is misleading at best, and could easily have been an ingenious fraud. Here is some advice, in case you should ever receive a similar message.

First, don’t just pay. There’s a very significant risk that this is all bogus – someone could easily have stolen a customer database, and is now using it to generate themselves plenty of money. $3 isn’t much, but over a database of ten thousand or more customers, is well worth this sort of effort.

Next, check the law. I’m not a lawyer, accountant, or tax expert, but can tell you that this sort of ‘demand’ has no basis in law.

In EU states, VAT is a tax which is paid by suppliers on the sales of their products. If a business which is VAT registered, and therefore required by law to pay VAT to its government, makes an error in charging (or not charging) the correct VAT, the legal responsibility for paying that tax to the government rests solely with that supplier. Customers are not required to check that the supplier is paying VAT correctly or at all.

When you purchase something, whether online or in a shop, whether outright or through a licence, that process is governed by contract law. The supplier quotes you a price, which may or may not include taxes which may or may not be calculated correctly. When you accept that offer, the supplier then provides you with the goods, in return for your payment. Once they have received the payment and you have received the goods, the contract of sale is complete.

If a supplier were then to come back to you and claim that the price that they had quoted, and you had paid, was incorrect in some way, that would represent their attempt to change the terms of a contract which is already complete. If you were feeling generous, you might wish to voluntarily give them some extra money, but you are under no obligation to do so. Indeed, I advise you not to do so. What if that business comes back again, seeking more money?

The whole point in having a contract between the supplier and customer is to determine what the latter will pay (how, and when), and what they will receive in return. Here, a supplier is claiming that they failed to price their product correctly to take into account their liability to pay VAT on the sale. That is entirely their concern and their problem to settle, not yours.

It would appear that, in this case, the supplier was not charging some customers in EU countries the VAT which the supplier was liable to pay. To try to recover tax due by emailing customers two years later, threatening them over “compliance with your government” is at best foolish. At worst, it could be nothing more than a scam, a phishing attack, and a fraud.

After checking the law, ask yourself whether any well-run business should send out emails to customers like that. If you’re still convinced that you should pay, then by all means do so. And while you’re about it, please send me $1000 for this advice. Retrospectively.