simple(haha) VAT query!
Discussion
Am i right in thinking the VAT rate applied is at point of invoice not point of payment? We have online shops so orders can be 24 hrs a day, i don't really like the idea of staying up until midnight to change over to the new VAT rate so can i do this Friday? That way customers will pay the new rate over the weekend and be invoiced the correct amount when we invoice on Monday?
VAT is chargeable at the VAT rate in force on the Tax Point Date. Your query is, what is the Tax Point Date for an on-line retailer.
My answer would be that it is the same as it is for any retailer - the date the sale is made. In most cases, that is the date the money is received by the supplier i.e. you. If you issue sales invoices BEFORE you are paid, however, the date the invoice is issued would take precedence over the date of the cash receipt.
My answer would be that it is the same as it is for any retailer - the date the sale is made. In most cases, that is the date the money is received by the supplier i.e. you. If you issue sales invoices BEFORE you are paid, however, the date the invoice is issued would take precedence over the date of the cash receipt.
Hi Eric, thanks for the reply. So we will have to invoice at the old rate for sales made upto midnight on Sunday? The problem i have is obviously online is open 24/7(and we get orders at some funny times i can tell you!)but we do not process these sales until the next day(or Monday for weekend sales) so the date on the invoice will be Monday 1st but we will have actually received payment prior to the 1st. Does that make sense?!
Can you cancel any orders you receive over the weekend on Monday morning, and then reinstate them? The customer doesn't need to know provided you can process the payment again. And ultimately it would only have to apply to orders taken after midnight on Sunday and before you start work so might not be too much to do, and those overcharged for the old VAT rate would be unlikely to complain.
andyps said:
Can you cancel any orders you receive over the weekend on Monday morning, and then reinstate them? The customer doesn't need to know provided you can process the payment again. And ultimately it would only have to apply to orders taken after midnight on Sunday and before you start work so might not be too much to do, and those overcharged for the old VAT rate would be unlikely to complain.
We can't, no. We can do partial refund though. Looks like we just need to invoice any weekend order Sunday evening. What a lot of hassle for not much gain!Midnight 30 November is the cutoff point.
Do you raise invoices for every sale?
When do you raise each invoice?
Do many of your customers reclaim VAT?
Do many of your customers insist on a fully detailed VAT invoice?
The time the customer ORDERS is NOT a tax point date. If they PAY at the same time as placing an order, then the PAYMENT date become the tax point date and the appropriate VAT needs to be applied.
Do you raise invoices for every sale?
When do you raise each invoice?
Do many of your customers reclaim VAT?
Do many of your customers insist on a fully detailed VAT invoice?
The time the customer ORDERS is NOT a tax point date. If they PAY at the same time as placing an order, then the PAYMENT date become the tax point date and the appropriate VAT needs to be applied.
Eric Mc said:
Midnight 30 November is the cutoff point.
Do you raise invoices for every sale? [b]Yes[/b[
When do you raise each invoice? When we process the order manually
Do many of your customers reclaim VAT? Most are private sale not business so no.
Do many of your customers insist on a fully detailed VAT invoice?No
The time the customer ORDERS is NOT a tax point date. If they PAY at the same time as placing an order, then the PAYMENT date become the tax point date and the appropriate VAT needs to be applied.
They pay when placing the order, so by that we can still invoice Monday @ 17.5% for sale up to the change time?Do you raise invoices for every sale? [b]Yes[/b[
When do you raise each invoice? When we process the order manually
Do many of your customers reclaim VAT? Most are private sale not business so no.
Do many of your customers insist on a fully detailed VAT invoice?No
The time the customer ORDERS is NOT a tax point date. If they PAY at the same time as placing an order, then the PAYMENT date become the tax point date and the appropriate VAT needs to be applied.
Dave_ST220 said:
Eric Mc said:
Midnight 30 November is the cutoff point.
Do you raise invoices for every sale? [b]Yes[/b[
When do you raise each invoice? When we process the order manually
Do many of your customers reclaim VAT? Most are private sale not business so no.
Do many of your customers insist on a fully detailed VAT invoice?No
The time the customer ORDERS is NOT a tax point date. If they PAY at the same time as placing an order, then the PAYMENT date become the tax point date and the appropriate VAT needs to be applied.
They pay when placing the order, so by that we can still invoice Monday @ 17.5% for sale up to the change time?Do you raise invoices for every sale? [b]Yes[/b[
When do you raise each invoice? When we process the order manually
Do many of your customers reclaim VAT? Most are private sale not business so no.
Do many of your customers insist on a fully detailed VAT invoice?No
The time the customer ORDERS is NOT a tax point date. If they PAY at the same time as placing an order, then the PAYMENT date become the tax point date and the appropriate VAT needs to be applied.
To the OP. Yes you can change it to 15% on Friday.
HMRC said:
These optional change of rate rules are for pre-payments and deposits received
before a change of rate, but relating to goods or services to be provided after a
change of rate. They also apply when VAT invoices are issued before a change
of rate which relate to goods or services to be provided after a change of rate.
So, if you received a payment before 1 December 2008, or issued a VAT invoice
before 1 December, for goods that you will provide, or services that you will carry
out after 1 December 2008, you can, if you wish, apply the 15% rate. You will
need to comply with some conditions, which include providing your customer with
a credit note (see paragraph 2.5) in cases where you have previously issued a
VAT invoice.
See http://www.hmrc.gov.uk/pbr2008/vat-guide-det.pdf for all the gory details. before a change of rate, but relating to goods or services to be provided after a
change of rate. They also apply when VAT invoices are issued before a change
of rate which relate to goods or services to be provided after a change of rate.
So, if you received a payment before 1 December 2008, or issued a VAT invoice
before 1 December, for goods that you will provide, or services that you will carry
out after 1 December 2008, you can, if you wish, apply the 15% rate. You will
need to comply with some conditions, which include providing your customer with
a credit note (see paragraph 2.5) in cases where you have previously issued a
VAT invoice.
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