Charging a client VAT after the contract has finished?

[SwanDive]

I finished my last contract at the begining of Nov and at that point i was not VAT registered (it was in progress). I got my VAT number through the other day and am now wondering if i have any right to go back to the client and charge them the VAT i should have done when i was in contract. The agent who placed me suggested i could do this but i'm not sure how i would go about it.

I have my own Ltd.

Any advice would be appreciated

[Clare@InTouch]

Hi Swandive,

It's very common to raise a VAT invoice retrospectively as when contractors start they often don't have the VAT number through (it can take weeks before HMRC process the application). It does depend on when your VAT registration is effective from though - if it's before you raised the invoice then you could, if not then you couldn't.

Also - It may well be your interest to do this if you're flat rate registered as you could then gain a bit of extra profit.

The agency may be able to help too if they operate any form of self billing arrangement.

[Clippy]

I finished my last contract at the begining of Nov and at that point i was not VAT registered (it was in progress). I got my VAT number through the other day and am now wondering if i have any right to go back to the client and charge them the VAT i should have done when i was in contract. The agent who placed me suggested i could do this but i'm not sure how i would go about it.

I have my own Ltd.

Any advice would be appreciated

IIRC, you will need to recover VAT from the VAT registration date on your VAT certificate and it is not a right but a legal requirement for you to do so.

If you were placed via an agent, then your contract will invariably be with him and not the end client in which case, this is who you need to submit the VAT only invoice to for the period in question.

I had a similar situation myself when I started contracting a few years ago and was probably lucky in that I had a very good relationship with the agency I worked through who paid the invoice within a week.

Edit: This thread should help which includes my comments at the time.

[craig1]

The advice I got from the VAT people many moons ago when I first registered was to charge the customer invoice+VAT but not call it VAT, e.g. £1000 VAT exclusive invoice, bill them £1175 and explain to them why you're doing that. Once you get your VAT registration number, you re-issue your invoice but separate out the VAT, e.g. £1000 + £175 VAT.

The written advice I received from HMRC at the time was that this method was preferred as it secured the money for HMRC and also ensured that there wouldn't be any payment difficulties if the end client refused to pay a retrospective invoice for VAT. The nice lady I spoke to at the time said that if I didn't go back for VAT then they'd treat all invoices issued during the period as VAT inclusive and bill me for the money.

Sounded a bit counter-intuitive to me at the time, especially around invoicing, but I got it as a written piece of advice from them (when they still did that) and I can see the logic of securing the money. I suppose it also means only one bank transfer/cheque/payment needs to be made. Thankfully I didn't have to issue more than one week of invoices before my VAT registration turned up.

[SwanDive]

thanks guys! I'm still waiting for the cert to come through so i can check the date its starts from. the agency did use a self billing system and i have all my invoices filed away so it should be relatively simple i guess providing the agent is willing to comply.

thanks once again!

[VectraMan]

I had the same thing, and just sent the client "VAT only" invoices when I had the VAT registration through. My understanding was you couldn't invoice for VAT until you had the number at least, but that was 5 years ago. The client shouldn't have any problem with that as in most cases they just recalim the VAT anyway, and you're not acting out of choice. You legally have to charge VAT as Clippy says.

[rd409]

Check the contract payment terms first. If it says your rate is exclusive of VAT, it is their legal responsibility to pay up VAT, or HMRC will be writing to them on your behalf if you report it. If the contract doesn't say anything, I am afraid they can deny retrospective VAT invoices, saying that the amount was inclusive of VAT, and you will have to cough up the VAT for that period.
Having said that, most of the agencies would allow raising VAT only invoices for retrospective tax period.