Charging Backdated VAT

[Deleted User]

Hi folks

Was advised to post in this part of the forum.

Okay, so I'm having trouble with a client regards invoicing. I'm a limited company, registered for VAT. I requested they backdate my EDR, which they did.

HMRC instructed me to reopen invoices sent from the date of EDR, apply VAT to them and send them again. Have done this, but one client thinks I'm confused and simply refuses to contemplate that I might be correct.

If someone can recommend an accountant that won't charge me a lot to send the guy a letter, would really appreciate it.

antonic

You can ask them to pay VAT on the new invoice that you have sent, but they are NOT obliged to pay it.

chrismac1

Overall I think you should pause and consider whether it's really worth getting heavy over this. First of all if things don't work out here, did your contracts in May specify VAT? For example, when I first set up I realised I was likely to become registered so VAT was clearly mentioned in my contracts from day 1, most of my clients need to be told about this in order to put a clause in there.

Then there is the client relationship to consider. Is this really worth a battle? Is it worth losing the client over? If not, I'd just cancel that VAT invoice and move on. Make a note to be extra careful over how you invoice this client in future. Create extra goodwill by writing to the client explaining that you're cancelling the invoice becuase you value their long term business more than the bit of VAT right now.

Recently I had a similar thing with a client who had not understood that although she'd be paying by standing order, there would be a £300 plus VAT invoice as her accounts were due right away. I went in 3 months later with a heavy letter. Too heavy.

She was upset. I saved the situation by really carefully explaining things to her and being very apologetic. But I should not have been there in the first place. I have completely reworded the letter I send in these circumstances.

Note I should make it clear you'll have to account for VAT on the original invoice and take this as a hit to profit.

[Deleted User]

That's good advice, thank you. I am quite irked by this client's attitude, but yes, he's a good one to keep hold of on a pure work front. Thankfully I don't often have to actually deal with him.

longforgotten

Is your client vat registered ? If so he can obviously claim the vat back if it is a business expense.

So if he is vat registered I would suggest he pays you the extra ( ie the amount of vat) once he has entered the invoice into his records and filed the relevant vat return.

He is not out of pocket. It would be solved by timing the repayment to you ie pays you once he's benefited from the refund.

[Deleted User]

He is VAT registered, yes. He thinks he can't put it through as it's been too long, and also that it doesn't make sense to backdate.

But I was under the impression that the sum can just be added to the next VAT return. Am I wrong?

longforgotten

An invoice that is up to 4 years old can be included on a vat return...............

I wonder what book-keeping/accounts system he is using ?

It is exceptionally common to include a 'late' invoice on a vat return.

It's a shame the guy has got uptight about it as he will not be out of pocket.

chrismac1

Work on the basis that this guy is probably an awkward client for most people. I wouldn't even go into what sort of accounts system he's using or all that jazz. Just note he doesn't want the hassle of this adjustment and move on. Create goodwill.

Let's assume this guy is used to confrontational relationships, this seems a reasonable assumption as the OP is behaving perfectly reasonably. You now have the opportunity to build one of the few non-confrontational business relationships this guy may have.

Let me give you a parallel. I have 7 or 8 clients who have never filed a VAT or tax return on time until they signed with me, never filed late since then. Those guys were a real challenge, their previous accountants had given up on them. By working on the things they were doing well and building out from that, they are now pretty much model clients. They are following my systems and grateful that HMRC are off their backs.

View awkward clients and situations as an opportunity. By giving up a few hundred quid in VAT gratiously now, you could easily be repaid many times over in the years to come.

missile

Power_Kitten wrote: »

I got my VAT number in December, and requested they backdate my EDR to last May, which they did..

Why did you back date it?

Power_Kitten wrote: »

I attended a HMRC workshop on VAT recently. I spoke to the chap after the lesson, and he instructed me to reopen invoices sent from the date of EDR, apply VAT to them and send them again. Have done this, but one client thinks I'm confused and simply refuses to contemplate that I might be correct. Since writing this earlier, he has phoned me and yelled. Nice.

So I need to send him proof. HMRC have sent me an email but the response I think is probably too vague for this client. If someone can recommend an accountant that won't charge me a lot to send the guy a letter, would really appreciate it.

Seems you have created this problem. I would not be too happy if one of my supplers did that and I would be looking for a.n.other supplier. :A

chrismac1

No he has not created this problem. It is part of the VAT system throughout Europe. There are many VAT and other tax rules which drive a coach and horses over the commercial realities of life and this is one of them. The OP has my every sympathy in this case.

missile

chrismac1 wrote: »

No he has not created this problem. It is part of the VAT system throughout Europe. There are many VAT and other tax rules which drive a coach and horses over the commercial realities of life and this is one of them. The OP has my every sympathy in this case.

I think you will find he is a she?
From post #1, OP chose to back date and this has created a problem for OP's customer. My sympathies are with the customer.