VAT registration threshold

[JapanRed]

Hi all,

Is the VAT registration threshold calculated on when the money lands in your business bank account or when you completed the work?

There usually is only a week or 2 between completing work and getting paid but occasionally there is a hiccup and a few invoices can all be paid in one lump sum, which may be a couple of months after said work was completed.

Thanks in advance.

[Chris Type R]

I stand to be corrected, but I thought this was based on turnover exceeding the threshold period to date and based on invoice values & invoice date.

[JeffreyD]

It depends how you do your accounting.

Do you recognise the income when you invoice or when it hits your account?

This is why sometimes you get a demand for payment and it has "this is not a vat invoice" written on it.

[Eric Mc]

Originally, turnover was based entirely on invoiced amounts. It didn't matter if the invoice had not yet been paid.

Over 30 years ago, simplified "cash accounting" was introduced for smaller businesses which allows these businesses to treat the date the cash was banked rather than the invoice date for VAT purposes. It is an option which has to be applied for.

[JapanRed]

Thanks all.

[PF62]

JapanRed said:

Hi all,

Is the VAT registration threshold calculated on when the money lands in your business bank account or when you completed the work?

Whichever comes first - payment or completion of service.

The date of any invoice is irrelevant, because the issue relates to the time of supply for VAT purposes and that is determined by one of three things - when payment was received, when the work was completed, or when a VAT invoice was issued.

As an unregistered person cannot issue a VAT invoice, then only the first two matter.

From the horses mouth -

https://www.gov.uk/hmrc-internal-manuals/vat-time-...

https://www.gov.uk/hmrc-internal-manuals/vat-time-...