Hi Richard,
This is not new.
When I got clobbered for back VAT, it was about 5 years ago. Since then we have done as Peter explained.

When it happened to me there was not even a section in the VAT guide about this, so I only had to pay VAT on the difference, as they didn't explain it fully. But I then had a letter after that explaining from x date I had to either show as a disbursmenent (as Peter says) & labour separately, or VAT on the whole amount, & the VAT guide was updated to reflect this.

Ah, so it's your accountant that should pay

HTH
Steve