While waiting for VAT registration

[ForBajor]

I've started a contract using my own Ltd. My business account is pending setup (a week away), and so my VAT registration is also going to lag.

In theory my account should be set up in the next week, allowing me to complete my VAT registration application - which will take another 2 weeks before complete based on my research.

The question is this: When my account is set up and I want to get paid, how do I go about this? I know I have to raise invoices with the agency, but is there any complication here for either the agency or the client in paying me when my VAT registration is pending?

Would it be better to wait until the VAT registration is complete before invoicing?

[jamesbrown]

Just issue an invoice that includes the VAT (and explain this to the client) but without identifying the VAT separately. When you receive the VAT registration, re-issue the invoice with the correct distinction between the fees and VAT and include your VAT registration number.

HM Revenue & Customs: Waiting for VAT registration and what to do in the meantime

[Jeremiah@RHJAccountants]

As Jamesbrown says nothing to add there.

However you do not need to wait for your business bank account to be set up before you apply for VAT registration.

If you have an accountant they can set up the VAT registration for you.

If not you can apply for the VAT registration yourself.

There seems to be a misconception that you need to wait for your business bank account to be set up before you can apply for VAT registration ?? This is simply not the case.

Good luck with the contract

[TheCyclingProgrammer]

If you can wait until registration is complete before invoicing this may be less faff. But otherwise, what JB said.

There is an alternate approach which is to invoice net of VAT with a notice saying "VAT registration pending" then issue a VAT only invoice when registered. I was advised to do it this way when I started 5 years ago however I do think the way HMRC recommend is considered the best approach.

[jamesbrown]

If you can wait until registration is complete before invoicing this may be less faff. But otherwise, what JB said.

There is an alternate approach which is to invoice net of VAT with a notice saying "VAT registration pending" then issue a VAT only invoice when registered. I was advised to do it this way when I started 5 years ago however I do think the way HMRC recommend is considered the best approach.

Yes, this is also a legitimate approach if the client/agent causes a fuss. Of course, the advantage of securing the money upfront is that you don't have to secure it further down the line, possibly after things have gone pear-shaped, you simply need to update the pro-forma invoice with a VAT invoice.

[GrumpyContractor]

If you can wait until registration is complete before invoicing this may be less faff. But otherwise, what JB said.

There is an alternate approach which is to invoice net of VAT with a notice saying "VAT registration pending" then issue a VAT only invoice when registered. I was advised to do it this way when I started 5 years ago however I do think the way HMRC recommend is considered the best approach.

This.

Exactly what I did a while back.

Are you on FRS?


Grump.

[Contreras]

I can't see any point in not following the HMRC guidance. The agency might refuse to pay the 'VAT' content until they see a registration number but then you are no worse off than if you had invoiced only for the net value.