Invoice-tax point date?
Discussion
I should fire this to our accountant but this place is full of knowledge so I should get the answer! Do invoices need to have a tax point date if the invoice date differs from the actual order date? eg, order placed on the 1st but not invoiced until say the 5th? I'm thinking more for instances when the VAT rate changes, not a regular thing I know but still good to cover. Cheers
I presume you are talking about VAT here as it is VAT that tends to refer to "Tax Point Date" in their regulations.
Invoices always need to have a tax point date but how that is decided can vary.
The date of the order tends NOT to be a tax point date. The date the actual invoice is issued is the usual date chosen but there can be occasions when some other date might become the tax point instead, such as the date of payment (which can sometimes be ahead of the issuing of the invoice).
Invoices always need to have a tax point date but how that is decided can vary.
The date of the order tends NOT to be a tax point date. The date the actual invoice is issued is the usual date chosen but there can be occasions when some other date might become the tax point instead, such as the date of payment (which can sometimes be ahead of the issuing of the invoice).
Tax Point often becomes an issue when the VAT rates change. Here is HMRC's instructions for this situation -
VAT rate changes
At the time of a VAT rate change, suppliers can choose to use the rate in force on the date the supply physically takes place under the normal time of supply rules (see above), even though a different rate might apply at the time of supply (tax point), for example because the time of supply has been changed to a different date by a payment in advance or the issuing of a VAT invoice. They can also do this when the liability of a particular product or service changes - for example, because a product or service that was standard-rated becomes reduced-rated.
These special provisions do not change the time of supply. Both supplier and customer must still account for VAT at the time of supply using the rules in the rest of this guide.
In the event of a VAT rate increase suppliers might want to use the special provisions so they can charge the lower rate of VAT on a supply that takes place before the rate increase, but the time of supply occurs afterwards when the VAT invoice is issued.
In the event of a VAT rate decrease suppliers might want to use the special provisions so they can charge the lower rate of VAT on a supply that takes place after the rate decrease, but where the time of supply occurred beforehand when a payment was received or a VAT invoice was issued.
Is your customer VAT registered?
VAT rate changes
At the time of a VAT rate change, suppliers can choose to use the rate in force on the date the supply physically takes place under the normal time of supply rules (see above), even though a different rate might apply at the time of supply (tax point), for example because the time of supply has been changed to a different date by a payment in advance or the issuing of a VAT invoice. They can also do this when the liability of a particular product or service changes - for example, because a product or service that was standard-rated becomes reduced-rated.
These special provisions do not change the time of supply. Both supplier and customer must still account for VAT at the time of supply using the rules in the rest of this guide.
In the event of a VAT rate increase suppliers might want to use the special provisions so they can charge the lower rate of VAT on a supply that takes place before the rate increase, but the time of supply occurs afterwards when the VAT invoice is issued.
In the event of a VAT rate decrease suppliers might want to use the special provisions so they can charge the lower rate of VAT on a supply that takes place after the rate decrease, but where the time of supply occurred beforehand when a payment was received or a VAT invoice was issued.
Is your customer VAT registered?
Why is this an issue with your customers?
Do you quote your prices VAT exclusive or VAT inclusive?
Did you raise your sale prices after the VAT change?
If you quote VAT inclusive and someone contracted to buy something from you at the VAT inclusive price you quoted before the VAT rate hike and they ordered BEFORE the VAT rate change - AND you didn't make any comment in your advertsing that prices would be rising after the VAT rate change, then I think you are obliged to supply the goods at the original pre VAT increase price. Obviously, you will still will have to pay the VAT to HMRC at the new higher rate, which of course means that you will be left with a lower amount to take as the actual VAT exclusive sale value for yourself.
Are you an on-line reatil outlet?
Do you normally issue specific VAT invoices to customers?
How do you handle exports?
Do you quote your prices VAT exclusive or VAT inclusive?
Did you raise your sale prices after the VAT change?
If you quote VAT inclusive and someone contracted to buy something from you at the VAT inclusive price you quoted before the VAT rate hike and they ordered BEFORE the VAT rate change - AND you didn't make any comment in your advertsing that prices would be rising after the VAT rate change, then I think you are obliged to supply the goods at the original pre VAT increase price. Obviously, you will still will have to pay the VAT to HMRC at the new higher rate, which of course means that you will be left with a lower amount to take as the actual VAT exclusive sale value for yourself.
Are you an on-line reatil outlet?
Do you normally issue specific VAT invoices to customers?
How do you handle exports?
Eric Mc said:
Why is this an issue with your customers? It isn't, I'm covering myself
Do you quote your prices VAT exclusive or VAT inclusive? both
Did you raise your sale prices after the VAT change? no
If you quote VAT inclusive and someone contracted to buy something from you at the VAT inclusive price you quoted before the VAT rate hike and they ordered BEFORE the VAT rate change - AND you didn't make any comment in your advertsing that prices would be rising after the VAT rate change, then I think you are obliged to supply the goods at the original pre VAT increase price. Obviously, you will still will have to pay the VAT to HMRC at the new higher rate, which of course means that you will be left with a lower amount to take as the actual VAT exclusive sale value for yourself.
Are you an on-line reatil outlet? yes
Do you normally issue specific VAT invoices to customers? yes, all customers get a VAT invoice
How do you handle exports?we only sell in the UK
I'm think I'm confusing things here! This is the scenario :-Do you quote your prices VAT exclusive or VAT inclusive? both
Did you raise your sale prices after the VAT change? no
If you quote VAT inclusive and someone contracted to buy something from you at the VAT inclusive price you quoted before the VAT rate hike and they ordered BEFORE the VAT rate change - AND you didn't make any comment in your advertsing that prices would be rising after the VAT rate change, then I think you are obliged to supply the goods at the original pre VAT increase price. Obviously, you will still will have to pay the VAT to HMRC at the new higher rate, which of course means that you will be left with a lower amount to take as the actual VAT exclusive sale value for yourself.
Are you an on-line reatil outlet? yes
Do you normally issue specific VAT invoices to customers? yes, all customers get a VAT invoice
How do you handle exports?we only sell in the UK
Our site shows an item at £10 + VAT so currently £12 inclusive, customer orders & pays that amount. We don't invoice them as we are closed until Monday. In the time between them ordering & paying the VAT rate changes to 25%. We will send them an invoice that shows the VAT rate at 20% BUT the date of this invoive will fall on the day where the VAT rate is in fact 25%.
As I said, there are special transition provisions for when VAT rates change. If the sale was finalised before the rate changes, then you account for the VAT at the old rate.
If the sale was initiated before the rate change but finalised after the rate change, retailers can still account for the sale at the old rate.
Obviously, sales initiated and finalised after a rate change will be at the new rate.
There are anti-avoidance provisions to prevent businesses manipulating sales so that they fall within a particular VAT rate.
These rules pertain whetrher rates go up or down.
If the sale was initiated before the rate change but finalised after the rate change, retailers can still account for the sale at the old rate.
Obviously, sales initiated and finalised after a rate change will be at the new rate.
There are anti-avoidance provisions to prevent businesses manipulating sales so that they fall within a particular VAT rate.
These rules pertain whetrher rates go up or down.
When doing invoices, the VAT rate that applies is the VAT rate at the date of supply. So on the day when the goods were shipped, if the VAT rate was 20% then the invoice should show 20% VAT.
As regards tax point, the invoice date should be the date on which the invoice was raised; I've been in some compromising positions where my finance department didn't do that and I've been asked to chase a backdated invoice that the customer had only received a day previously. Naughty.
As regards tax point, the invoice date should be the date on which the invoice was raised; I've been in some compromising positions where my finance department didn't do that and I've been asked to chase a backdated invoice that the customer had only received a day previously. Naughty.
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