VAT Registration and waiting one mth for number

VAT Registration and waiting one mth for number

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Discussion

cerberaperv

Original Poster:

77 posts

127 months

Thursday 16th May
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I`m trying to get my head around VAT registration and the month were you have registered for vat but don`t have a number to charge vat. Before anyone suggests speaking to my accountant, I have and I`m challenging his advice. See below.

This is what I have read and my understanding of it.
You register for vat at month end. You will get vat number at next month end. During the waiting one month period, you cannot charge vat as you don`t have a vat number, but hmrc will bill you for vat on any invoices for that month (in this case its estimated at £70k turnover, so a 14k vat bill). HMRC and various online advice says just increase your invoices by 20% ready for the vat fee. Easier said than done as I`ve already quoted and agreed on all of June`s work. Which is a mix of residential and commercial work. I was near to the threshold with my resi work but it`s the recent commercial contract that has more than tipped me over. My accountant says HMRC won`t bill me for the limbo month, as technically the company is not vat registered during that period, and we cannot charge vat either.

I`ve been putting on my quotes for the past few weeks, that if my invoices are sent during June, they may be subject to a 20% vat increase but how do I/can I legally charge this?
I`ve read that you can`t go back to commercial clients with a separate vat invoice at a later date when we have the number, asking for it to be paid, as hmrc don`t allow this.

Any advice on how not to be landed with a 14k vat bill while HMRC get round to issuing the vat number, would be greatly appreciated?

Or am I completely wrong?


AB

17,012 posts

197 months

Thursday 16th May
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My understanding and the way I have always done it is that any invoices raised prior to the date on your VAT reg certificate don't have VAT and those dated afterwards do.

Your accounting software should sort this out for you and MTD through your accounting software should recognise this.

Any credits/mistakes etc will balance out at your next return.

I've started a few businesses, generally register for VAT before we start training but on the odd occasion we've done it afterwards, it's been as above.

Not saying I'm 100% correct but it's worked like that so far.

wheelerc

221 posts

144 months

Thursday 16th May
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When you applied for VAT you will have specified a registration date.

https://www.gov.uk/register-for-vat/how-register-f...

Accounting for VAT while you wait for your VAT number

You cannot include VAT on your invoices until you get your VAT number but you can increase your prices to account for the VAT you’ll need to pay to HMRC.

Example

On 1 May, you arrange a £100,000 contract to provide services to a new customer. You register for VAT because you know you’ll go over the threshold in the next 30 days.

Your effective date of registration is 1 May. This means you’ll need to pay VAT to HMRC on any invoices you raise from that date.

To account for the VAT you’ll need to pay, tell your customer that you’ll be adding 20% to the original contract amount of £100,000 and then raise an invoice for £120,000.

After you get your VAT number, reissue the invoice showing the full amount including the £20,000 VAT. Your customer does not need to make any extra payment but can now reclaim the additional £20,000 from HMRC on their next VAT return.

Doofus

26,157 posts

175 months

Thursday 16th May
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If you are waiting for a VAT number then you invoice your customer the gross amount but without the VAT seperately. (invoice £120, not £100 + £20) and state that a replacement VAT invoice will be issued in due course.

When you get your VAT number, you issue a new, replacement, invoice for £100 plus VAT.

MattsCar

1,075 posts

107 months

Saturday 18th May
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Doofus said:
If you are waiting for a VAT number then you invoice your customer the gross amount but without the VAT seperately. (invoice £120, not £100 + £20) and state that a replacement VAT invoice will be issued in due course.

When you get your VAT number, you issue a new, replacement, invoice for £100 plus VAT.
This is correct.

And what a ball ache it is.


Edited by MattsCar on Saturday 18th May 20:57