My situation !! Permie going contracting

[platforminc]

I am currently permie at the moment but going contracting soon, I obviously have a PAYE system running at the moment through my employer but I done a short consultancy work for a company which I now need to invoice for. Here is the story.

Company A: Permie job currently running
Company B: Do short consultancy work for, last time it lasted a week and I used an umbrella to save on admin tasks.
Company C: Long term contract work starting soon

I have formed my own LTD in view of company C as its more efficient for me to do so, however Company B wants me to do some 2-4 day consultancy work for them, as the work is a bit random atimes. I have now done couple of days work but need to send an invoice to them so that I can get paid. my question is, I am just about to register for VAT online ASAP, but need to raise the invoice for Company B before it starts getting late as its weeks overdue already. I know legally to claim VAT, one has to specify VAT number, problem is that I do not have it at the moment as my business bank account just got opened days ago. Do I raise Invoice without VAT like that ?

Also moving from Company A to Company C, are there any gotchas that I need to be aware of tax/NI wise ?

I am interviewing accountants to pick one, but I thought I speak to other experts too.

Thanks in advance.

[SueEllen]

You cannot invoice for VAT until you have the VAT number. Otherwise you are committing fraud.

You need to raise your invoice without it and then once you get your VAT number, send the customer an amended invoice for the VAT.

Get yourself an accountant asap as you need to sort out your payroll to be as tax efficient as possible. Depending on your permie salary you may not run one this year at all and all the money you take out may be as dividends.

BTW when you start a new thread there is no need to use exclamation marks (!!) as you will annoy people.

[platforminc]

You cannot invoice for VAT until you have the VAT number. Otherwise you are committing fraud.

You need to raise your invoice without it and then once you get your VAT number, send the customer an amended invoice for the VAT.

Get yourself an accountant asap as you need to sort out your payroll to be as tax efficient as possible. Depending on your permie salary you may not run one this year at all and all the money you take out may be as dividends.

BTW when you start a new thread there is no need to use exclamation marks (!!) as you will annoy people.

Thanks for the response and most importantly the exclamation mark tip.
When you say you may not run one this year, you mean run a payroll and take out the contract pay as dividends, wouldnt I have to pay tax or are you saying that the tax paid on Permie role may well be enough for the year if Accountant balances it out ?

On the issue of VAT, I know its illegal to charge VAT without VAT number and I wasnt going to do this, when reading through the forum I understand that it can sometimes be difficult chasing VAT payments and I may have to end up stumping up the BILL, TBH I had rather not use my own money to pay VAT. Is there anything I can do here, I think the agency does invoice company B with VAT, am I right in my assumption that even if I invoice without VAT now, they have collected the money anyway and shouldn't be a problem paying the VAT to me after I get my VAT number ?

Thanks.

[SueEllen]

Thanks for the response and most importantly the exclamation mark tip.
When you say you may not run one this year, you mean run a payroll and take out the contract pay as dividends, wouldnt I have to pay tax or are you saying that the tax paid on Permie role may well be enough for the year if Accountant balances it out ?

Yes.

Ask the accountant before you join. If the accountant doesn't have a clue then choose another accountant.

On the issue of VAT, I know its illegal to charge VAT without VAT number and I wasnt going to do this, when reading through the forum I understand that it can sometimes be difficult chasing VAT payments and I may have to end up stumping up the BILL, TBH I had rather not use my own money to pay VAT. Is there anything I can do here, I think the agency does invoice company B with VAT, am I right in my assumption that even if I invoice without VAT now, they have collected the money anyway and shouldn't be a problem paying the VAT to me after I get my VAT number ?

Thanks.

Yes. If the agency gives you problems there is advice on the threads you searched.

[platforminc]

Thanks very much.

[Wanderer]

When you say you may not run one this year, you mean run a payroll and take out the contract pay as dividends, wouldnt I have to pay tax or are you saying that the tax paid on Permie role may well be enough for the year if Accountant balances it out ?

Yeah, if you have taken a salary of > £7,000 already then don't draw a salary from your company until April 6th next year otherwise you'll pay tax that you could avoid.

[CU63]

VAT - As you're not already VAT registered then you could raise an invoice without VAT, as there's no legal need to register for VAT until your turnover exceeds £73k per year and then just register for VAT in your own time and charge VAT on invoices going forward.


If you decide to invoice without VAT and backdate your VAT registration, so that you can claim VAT on the invoice once registered, then I'd suggest where you would normally put a VAT number, state that a VAT number is pending so they know to expect that VAT will be payable once the number is received.

[lje]

This is quite simple - but people seem to get it wrong quite often...

Before you register for VAT - invoice without VAT

After you apply for registration but before you are registered - you should increase your prices by 20% with an explanation as to why, then you must re-issue those invoices once you have your VAT number (see HMRC info).

Once you have your VAT number - Add VAT to each invoice and make sure that you include your VAT number on the invoice.