VAT rate change question

[AnthonyC]

Our company was invoiced for the advance rent on one of our offices at the back end of last year,when the VAT was at 15%. We paid the invoice in January. We have since been sent a subsequent invoice for the difference in VAT ( from 15% to 17.5% )as the rate has now gone up.

Can a company do this ie increase an already issued invoice as the vat rate has gone up between the issueing og the invoice and its payment ? We're not talking fortunes here, was just a bit surprised.

Thanks
AC

[Eric Mc]

Can you claim the VAT back?

[AnthonyC]

Yes we can Eric, so I guess it really doesn't make much difference, just the principle really I suppose. Pushy bas****s.

I know you're the man for these things Eric, I have another VAT question - am I right in thinking that a company ( rent again, different office )cannot charge VAT on a holding deposit as it doesn't generate a tax point ?

Thanks
Anthony

[JustinP1]

Don't see how you can charge VAT on a deposit as there is no value added, or work done.

Whether it is the 15% or 17.5% is not the invoice point, but the time when the service is supplied. Where this straddles HMRC seem to suggest it should be when the majority of the service was carried out.

[Deva Link]

JustinP1 said:

... but the time when the service is supplied.

...or when the payment is made.

HMRC seems very laid back about this - their guidance on the rate change more or less says you can charge either rate. As pointed out above, for a business it makes no odds anyway.

[Eric Mc]

AnthonyC said:

Yes we can Eric, so I guess it really doesn't make much difference, just the principle really I suppose. Pushy bas****s.

I know you're the man for these things Eric, I have another VAT question - am I right in thinking that a company ( rent again, different office )cannot charge VAT on a holding deposit as it doesn't generate a tax point ?

Thanks
Anthony

Define a "tax point".

HMRC state that a tax point is the "earlier of, the prodiuction of an invoice or the receipt of the cash".

[AnthonyC]

Will a refundable, holding deposit ( in this case the equivalent of 2 months rent )need to have VAT added.

I know I'm being a real pedant ( sp? ) here.

[Eric Mc]

Possibly not. I think the tax point would arise once the deposit became "income" in the hands of the deposit holder.