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The claim relates to VAT. £20,000 was paid to HMRC for late registration to VAT. However, this could have been recouped from the contractor since they are registered for VAT and they could in turn have claimed this back as input VAT so would not have minded paying it. This this advice was not given. It is now out of time limit for this to be done.
This took place in 2007 and yes the service was paid for.