Help with VAT for fuel merchant

chrismac1

No. He needs to tell HMRC by the end of the month in which he goes over, and keep records of sales on a monthly basis for this purpose - hint - if it is the 28 March and another £2k of sales by 31st will take you to £77,500 then make sure you only do £1,400!

HMRC will then send you VAT registration details with an EFFECTIVE date of VAT - in the example quoted, if April is the month you go over then typically 1 June 2013 or even 1 July will be the date given.

That is the date from which you begin accounting for VAT on outputs. You can go back 6 months to claim VAT on services not consumed by the effective date, and 4 years on purchases and assets still in use in the business on the effective date.

This means it sometimes makes sense to register a little early. For example, if you have a big legal bill with a tax point of 28 September 2012, suddenly it can be a good idea to have an effective date of 28 March 2013.

highrisklowreturn

Thanks, but the question is, if he has earnt say 76,900, then will cross the threshold the next month, does he retrospectively have to amend all his preceeding sales of 76,900 to include 5% vat, thereby diluting the profit made upto this point?

chrismac1

Nope. Read my post again carefully. He will have to apply VAT to all taxable sales made from the effective date of registration onwards. As and when a business applies for VAT registration for any reason, it should factor in the VAT aspect on sales.

It cannot raise VAT on sales invoices, but should warn invoice customers on the face of the invoice that a VAT application is in progress. VAT reg. is one of the few areas of HMRC that moves quickly - funny how they can move fast when it's going to be you paying them!

So 2 weeks or less is normal from date of application, online application is advisable so you have evidence.

highrisklowreturn

ok gotchat - so up to 77k, he would, for example, charge 141 for say 200 litres of oil. After vat threshold crossed by sales, he will be charging 148, and no previous sales up to 77k will have to be amended. However, from the next tax year, he will have to charge vat up front with any sale? So his first 77k is like a vat / tax holiday?

00ec25

highrisklowreturn wrote: »

ok gotchat - so up to 77k, he would, for example, charge 141 for say 200 litres of oil. After vat threshold crossed by sales, he will be charging 148, and no previous sales up to 77k will have to be amended.

correct

highrisklowreturn wrote: »

However, from the next tax year, he will have to charge vat up front with any sale? So his first 77k is like a vat / tax holiday?

No read this post again he will be charging from the effective date that can be any date HMRC tells it, it is not aligned with any one tax year

chrismac1 wrote: »

No. He needs to tell HMRC by the end of the month in which he goes over, and keep records of sales on a monthly basis for this purpose - hint - if it is the 28 March and another £2k of sales by 31st will take you to £77,500 then make sure you only do £1,400!

HMRC will then send you VAT registration details with an EFFECTIVE date of VAT - in the example quoted, if April is the month you go over then typically 1 June 2013 or even 1 July will be the date given.

That is the date from which you begin accounting for VAT on outputs. You can go back 6 months to claim VAT on services not consumed by the effective date, and 4 years on purchases and assets still in use in the business on the effective date.

This means it sometimes makes sense to register a little early. For example, if you have a big legal bill with a tax point of 28 September 2012, suddenly it can be a good idea to have an effective date of 28 March 2013.