VAT question # 3897438

[spearfish]

ok...

scenario.

I became flat rate VAT registered on the 1st April 07
My agency pays my invoices 4 weeks after the day i submit them.

I've been submitting invoices to the same agency for 4 months now.

According to my accountant, I should be charging VAT payments any day after the 1st april. And since I get paid 4 weeks after invoicing date, it means any invoices I submitted in March should have VAT included (as these payments hit my account in April).

Now, I don't know if i'm being dumb.. But I would've thought logically, I can only charge VAT according to invoice date and not on the date that the cash hits my business account?

Does this make sense?

hope someone can help. I can try and explain in english if necessary..

[Red 7]

Your VAT registration certificate should have a 'registration active from' date (or something like that). If that date is 1st April, don't attempt to add VAT to your March invoices... C&E would take a very dim view of that. But do add VAT to all invoices following that date.

AFAIK it's the invoice date that's important, the date that payments hit your bank is irrelevant.

[malvolio]

There are two ways of accounting for VAT. The trickier one, accounting-wise is on the Tax Point date on the invoice, but then you get into accruals and transfers and provisional payments, especially if the payment arrives off the end of the VAT accounting period.

The simpler one, for small businesses anyway, is to calculate the VAT when the invoice payment hits your accounts. Which is why most accountants suggest you do it that way: as long as you are consistent, the revenuemen won't mind.

And which is what your accountant should have told you up front...

[Red 7]

In that case I'm talking absolute b*llocks and stand corrected

[ASB]

In terms of vat that is to be charged it is whether you were vat registered at the date the service was provided or goods supplied that matters. Check HMRC website and if you explained your position in the same way to your accountants as you did in their post then I completely fail to understand why they think you should be charging for vat a month before you were registered.

Caveat: what is the registration date as notified by HMRC - you may need to send vat only invoices for services provided since then if you invoiced whilst registration was pending.

There are two options with accounting for vat with HMRC as Malvolio said. However with cash accounting it used to be necessary to request permission from HMRC - I do not know if this is still the case.

In terms of the company books it was always the case that you had to operate accruals based accounting (however this may have changed).

[Lewis]

IHowever with cash accounting it used to be necessary to request permission from HMRC

Really, ooops.
Is that still the case?

[ASB]

Really, ooops.
Is that still the case?

[repeat]Don't know [/repeat]