Backdating VAT

[comports]

Hi all - first post although have been contracting for many years.

I have recently started a new company - (to many issues with my old ltd co and accountant which I won't go into here but I wanted a clean start.)

The long and short if it is my old accountant advised me incorrectly for the last time and I needed to backdate my VAT registration of the new company to last March from November last year. No real issue as I spoke with HMRC VAT office and completed all the paperwork required and duly became registered in November (with effective date of March) for the new company.

So I recreated my monthly invoices including VAT from that period and provided them to the agency I work through and worked out how much VAT to pay over the HMRC which I did in December quarter end.

So far I paid out around £20k in backdated VAT - expecting my agent to resubmit his next VAT return including my updated invoices, reclaim the additional VAT as input VAT and settle with me (He is VAT registered and so had already rendered his own output VAT). He is now telling me that he has already paid over the VAT and has no money so can't ay me. He also said it takes months for HMRC to pay the money back to him so is not willing to upfront it. He has offered to pay me in drib and drabs over the next year.!

Is he correct in this - As far as I was aware its a simple case of submitting a negative figure on his VAT return and settling my invoices (happy to wait until he gets this remittance from HMRC).

Am I missing something.?

Thanks all

[GhostofTarbera]

Backdating VAT

Your old company invoiced your agent + vat already and agent paid your old company all money due?


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[MJHolohan]

This sounds like a bit of a mess. Did you charge VAT on the original invoices you sent to the agent? Have you re-invoiced the agent from a new company after he has already paid invoices to your original company? What are your reasons for backdating your VAT to March?

[Craig@Clarity]

So far I paid out around £20k in backdated VAT - expecting my agent to resubmit his next VAT return including my updated invoices, reclaim the additional VAT as input VAT and settle with me (He is VAT registered and so had already rendered his own output VAT). He is now telling me that he has already paid over the VAT and has no money so can't ay me. He also said it takes months for HMRC to pay the money back to him so is not willing to upfront it. He has offered to pay me in drib and drabs over the next year.!

Is he correct in this - As far as I was aware its a simple case of submitting a negative figure on his VAT return and settling my invoices (happy to wait until he gets this remittance from HMRC).

Am I missing something.?

Thanks all

Hi there and welcome,

Sounds all fairly straightforward. Since backdating VAT registration, you've quite rightly then gone back and applied VAT to the applicable sales invoices and sent those off to the agent, who should in turn declare these invoices on his next VAT return and claim the VAT back.

There will be a sequence of cash flow whereby he will need to claim the VAT back, receive it from HMRC and then in turn settle your invoices so you can in turn pay it back to the VAT man. It seems you're clear on the mechanics of this and happy to wait for the cash to flow through but to pay you in dribs and drabs over the next year sounds like a delay tactic. In most cases, he should receive the VAT refund in full within a month of submitting his next VAT return unless HMRC open an inquiry into his return because the computer has flagged that he normally has a VAT liability. If that is the case, it can be delayed by months until HMRC are satisfied it's a genuine and correct VAT return.

[GhostofTarbera]

Hi there and welcome,

Sounds all fairly straightforward. Since backdating VAT registration, you've quite rightly then gone back and applied VAT to the applicable sales invoices and sent those off to the agent, who should in turn declare these invoices on his next VAT return and claim the VAT back.

There will be a sequence of cash flow whereby he will need to claim the VAT back, receive it from HMRC and then in turn settle your invoices so you can in turn pay it back to the VAT man. It seems you're clear on the mechanics of this and happy to wait for the cash to flow through but to pay you in dribs and drabs over the next year sounds like a delay tactic. In most cases, he should receive the VAT refund in full within a month of submitting his next VAT return unless HMRC open an inquiry into his return because the computer has flagged that he normally has a VAT liability. If that is the case, it can be delayed by months until HMRC are satisfied it's a genuine and correct VAT return.

What if the agent has already paid his old company all money due + Vat already and OP then sets up new company and try’s to get vat for new company (a company the agent had no contract with)




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[Craig@Clarity]

What if the agent has already paid his old company all money due + Vat already and OP then sets up new company and try’s to get vat for new company (a company the agent had no contract with)




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Then I'd assume that the agent would simply reject the invoices altogether.

The way I read the OP scenario was that the invoices all relate to the new company and the "old company" was merely a red herring.

[pr1]

Should have signed up for cash accounting

VAT Cash Accounting Scheme - GOV.UK

You wouldn't be £20k out of pocket for who knows how long

I'd have hoped your new accountant would have told you that