Claiming VAT on Invoices

[haverer]

Evening everyone, I am new to the boards and am looking for some advice please.

I started contracting in June and setup my business account, registered with an Accountant, etc and also registered for VAT.

Each week I have been submitting my timesheets to the Agency online and I get paid my daily rate the following Friday into my Bank Account.

I had a chat with my Accountant earlier today as I received a letter from HMRC advising I have VAT rates to pay. My Accountant asked me to send copies of my 'invoices' over to him and he would sort it out. I had no idea what he meant but soon discovered that I should have been sending my Agency an invoice each week in addition to my Timesheet. I had no idea about this and this was the first time my Accountant had mentioned it to me.

I am still not 100% clear but does this effectively mean I have been losing out on 20% of my daily rate? Is it now too late to invoice the Agency?

Any advice would be appreciated. Thanks!

[mudskipper]

Evening everyone, I am new to the boards and am looking for some advice please.

I started contracting in June and setup my business account, registered with an Accountant, etc and also registered for VAT.

Each week I have been submitting my timesheets to the Agency online and I get paid my daily rate the following Friday into my Bank Account.

I had a chat with my Accountant earlier today as I received a letter from HMRC advising I have VAT rates to pay. My Accountant asked me to send copies of my 'invoices' over to him and he would sort it out. I had no idea what he meant but soon discovered that I should have been sending my Agency an invoice each week in addition to my Timesheet. I had no idea about this and this was the first time my Accountant had mentioned it to me.

I am still not 100% clear but does this effectively mean I have been losing out on 20% of my daily rate? Is it now too late to invoice the Agency?

Any advice would be appreciated. Thanks!

Your best bet is to probably advise the agency of your error, and send them a VAT only invoice for the 20%. There are some templates if you google. Hopefully they will be cooperative - it shouldn't cost them anything.

However, it does sound like there's some gaps in your understanding - time to look for a new (better) accountant maybe? Your accountant should be able to help you sort out the mess.

[Alan @ BroomeAffinity]

Yeah, you need a new accountant IMO. Are you on Flat Rate Scheme? You almost certainly should be.

Forgive me going OT, but because you appear to have knowledge gaps have you considered the following: Are you clear on your salary / dividend level? What about RTI? Have you made any corporation tax provision?

[Alan @ BroomeAffinity]

Oh, and if you need an invoice template pm me your email and I'll send one over.

[turbowoowoo]

It sounds like you may be on automatic billing from the agency. Also the agency should have confirmed all of your company details ie Back account, VAT number etc before hand.

Your accountant is not there to hold your hand and oversee your invoices, that's your responsibility I am afraid. you should ensure everything you do Is charging VAT.

[haverer]

Thanks for the replies guys. I have 'Self billing' from the Agency but there is no VAT details on them even though I did supply the Agency with these details when I started.

I agree - my Accountant should have advised me of this when I first met him but there was no mention of it. Wish I had done more research myself. I have contacted the Agency and will bill them separately for the VAT.

Thanks again.

[TheCyclingProgrammer]

If you aren't on self billing, you need to invoice them for all work done to date, plus VAT. You may want to include with this a statement of account showing all of their payments and what they still owe, which should just be the VAT.

You will need to put this on your next VAT return and pay it even if you're still waiting to be paid by the agency.

I'm surprised your accountant didn't pick this up sooner but also can't believe how ignorant you've been of the basics in running a business.

[haverer]

Yes I am on self-billing. Will hopefully get it sorted, thanks again for the replies.

[TheFaQQer]

Any advice would be appreciated. Thanks!

Nothing to do with your VAT situation, but...

• Start reading the First Timers section over on the right.
• Have a look at ipse.co.uk and get a copy of their guide to contracting, which is free. Read and understand.
• Ask your accountant for guidelines on expenses and operating a business.
• Go to SJD Accountancy - Accountants for Contractors, Freelancers and Consultants | IR35 Tax and have a look at their guide to getting started - again, it's free and has some good information in it.

Good luck.

[Alan @ BroomeAffinity]

Your accountant is not there to hold your hand and oversee your invoices, that's your responsibility I am afraid. you should ensure everything you do Is charging VAT.

To a degree you're correct but I also think that for newbie contractors there needs to be an element of handholding. This often completely alien territory so we always try to help them out as much as we can, especially in the first couple of months.