Issue with Vat added at the end of a job

longforgotten

No JSC1 has not made it up.


A company who claims vat when invoices are raised can be caught out if they receive a payment in advance eg


A company receives £2000 on account say in April, and the money received relates to a standard rated supply, but the final invoice is not raised until May. Say the companies VAT return ends in April, the company still has to declare the VAT within the £2000 on it's April return as, in this case,the tax point is the date the money is received . Also if their customer is vat registered and the £2000 is for a business expense then they should ask for an invoice for the £2000 so they can claim the vat back.

JCS1

longforgotten wrote: »

No JSC1 has not made it up.


A company who claims vat when invoices are raised can be caught out if they receive a payment in advance eg


A company receives £2000 on account say in April, and the money received relates to a standard rated supply, but the final invoice is not raised until May. Say the companies VAT return ends in April, the company still has to declare the VAT within the £2000 on it's April return as, in this case,the tax point is the date the money is received . Also if their customer is vat registered and the £2000 is for a business expense then they should ask for an invoice for the £2000 so they can claim the vat back.

If you go back a few years when the VAT rate changed, it caught out companies with deposits being paid at the old rate before invoices were raised.

longforgotten

Yes, I remember when home electricity had no vat added to it and HMRC were going to bring in the 5% rate. I paid over what I could afford before the new rate came in. I then saved myself the 5% vat as the supplier had to apply the vat rate that was prevailing at the time they received the money.