Requesting VAT after registration

[brightbits]

Easy! I didn't say he didn't tell me, I'm saying I requested the invoice before my accountant told me I needed to register for VAT. This is probably because it took a while for the accountants to set everything up for me, which by the time it was set up and I started actually getting help from someone, I'd already issued an invoice.

I didn't know the implications of registering for VAT from that date, and I wasn't told that this issue might arise. I was just told I should register for VAT from the date the company started, and sent a form to sign...

[captainham]

Easy! I didn't say he didn't tell me <snip>

Yep you did.

Thanks for all the useful responses.

Basically I never added VAT or said VAT registration was pending when I issued the invoices as I didn't know I was going to be VAT registered, didn't know this situation would arise (I didn't understand VAT as I do now) and I didn't know my accountant would register me from the date my company started, or the implications this would have.

And I'm not having a pop...just offering friendly advice. Even if your accountant is doing things you are aware of, he/she should be keeping you fully informed of what that means for you, otherwise you need to look for an accountant that won't leave you in the lurch like this when they could have made things clearer upfront.

[brightbits]

You interpret it wrong and ignored my clarifying. The accountant wasn't ready to start dealing with me until after I'd issued the invoices, therefore its not that they told me and I didn't listen, or they did it without my knowing, I just simply did the invoicing before I was advised to be VAT registered.

So, the crux of the question is now can I change the date from which I am VAT registered, if the client doesn't fancy paying it when they don't technically have to (Its a single-man company who probably doesn't fancy losing that much cashflow until it gets refunded?).

I'll talk to my accountant. Thanks for your help.

[captainham]

I would also call HMRC VAT helpline, I've found them to be helpful and generally quite knowledgeable.

I'm guessing it will be a ballache to amend it now (if it's possible), but you never know; I'd definitely give it a go, especially if the alternative was me handing over my own LtdCo's cash to the VAT man!

[SueEllen]

You interpret it wrong and ignored my clarifying. The accountant wasn't ready to start dealing with me until after I'd issued the invoices, therefore its not that they told me and I didn't listen, or they did it without my knowing, I just simply did the invoicing before I was advised to be VAT registered.

Has your accountant talked to you or pointed you to someone about tax planning?

If they haven't mentioned it or pointed you to some sort of guide you may be better off looking for another accountant who does have such stringent rules and communicates with you properly so you don't risk being out of pocket in your first year.

There are a few accountants on here who offer decent advice including the 2 who answered in this thread. (Hint: they are the posters with @ in their username)

[Contreras]

I would also call HMRC VAT helpline, I've found them to be helpful and generally quite knowledgeable.

I'm guessing it will be a ballache to amend it now (if it's possible), but you never know; I'd definitely give it a go, especially if the alternative was me handing over my own LtdCo's cash to the VAT man!

This ^^ is good advice IMHO, especially if the first VAT return hasn't yet been submitted.

... and ask your accountant WTF they backdated the registration without discussing the implications with you first.

... and did they discuss the Flat Rate Scheme with you as well, and if not then why not.

[Wanderer]

My accountant has recently registered me for VAT from the date my business started, which was several months ago.

He asked me to send VAT only invoices to anyone I've invoiced previously which I've done but are they required to pay that?

Send an invoice for the VAT, enclose a copy of the VAT registration certificate and a covering letter saying that your VAT registration has now come through, backdated to dd/mm/yyyy and this is an invoice for the VAT. As Sally@InTouch says, this is standard procedure. It does sound counter intuitive but your accountant's advice is correct so just get on with it - there is nothing to wring your hands over unless the supplier actually refuses to pay. They may query it but stick to the script above and they will get the point eventually.

I presume you have discussed the implications of the flat rate scheme with your accountant and have registered for that it it's appropriate for your business too?

As Pondlife says, so long as the clients are VAT registered (and they most likely will be unless they are very small - eg smaller than your business) then it's a total non-issue because they just claim it back on their VAT return.

if you were always intending to register for VAT then I thought your invoices pre-registration should have included this in the invoice (but not as a separate VAT item; i.e. £500 + VAT should have been invoiced as one charge of £600, with a note on the invoice to explain why). Then when you are VAT registered, you have already invoiced for the VAT (effectively) so all you need to do is re-issue a new invoice to the client so that they can reclaim the VAT, and you've already got the money put aside to pay the first VAT bill.

Great idea! But unfortunately it's illegal to charge VAT unless you are VAT registered. As for doing it on a nod and a wink, on the understanding that you will eventually get VAT registered (but what if you don't?) - your suggestion will be met with hysterical laughter so don't even bother suggesting this one. (Edit: As Contreras pointed out, I was wrong on this point, see my post below with a correction and apology to captainham)

The accountant's advice is correct, follow the instructions and it will all sort itself out as if by magic.

[Contreras]

Not that this helps the OP now, but if you were always intending to register for VAT then I thought your invoices pre-registration should have included this in the invoice (but not as a separate VAT item; i.e. £500 + VAT should have been invoiced as one charge of £600, with a note on the invoice to explain why). Then when you are VAT registered, you have already invoiced for the VAT (effectively) so all you need to do is re-issue a new invoice to the client so that they can reclaim the VAT, and you've already got the money put aside to pay the first VAT bill.

Great idea! But unfortunately it's illegal to charge VAT unless you are VAT registered. As for doing it on a nod and a wink, on the understanding that you will eventually get VAT registered (but what if you don't?) - your suggestion will be met with hysterical laughter so don't even bother suggesting this one.

I was going to say something similar, but on re-reading it captainham didn't actually suggest to charge VAT on the initial invoice. IANAL, but I can't see anything wrong with simply charging £600 up front with a declared "intention" (ie, it might not happen) - the wording would need to be clear though.

Strictly speaking you must charge VAT right from the point of applying for VAT registration, ie. before being issued with a VAT no. There is a specific form of words (in the HMRC guidance notes) that you need to put on the invoice to indicate this.

[Wanderer]

IANAL, but I can't see anything wrong with simply charging £600 up front with a declared "intention" (ie, it might not happen) - the wording would need to be clear though.

Reading HMRC's guidance on this, it appears that you and captainham are both right and I was wrong so I apologise to captainham for my post above.

I do have to wonder what would happen if I did an invoice to a company saying that I was going to reissue the invoice as amount+VAT later but never actually did get VAT registered. What comeback would the supplier have? Certainly, I would be suspicious if one of my suppliers tried this trick...

[Scott C Accountant]

Under VAT legislation, when recharging expenses you should reduce any VATable ones [to be VATable they have to be of a VATable nature i.e. hotel bills, parking fees, meals etc (certain expenses like flights and rail fares are not VATable) and they should contain a VAT number on the invoice if it is a VAT registered business] down to the pre-VAT element [e.g. if you had a hotel bill for £100.00 + VAT ( = £120.00) the amount that you would list on your expenses would be £100.00 and if you had a rail fare for £50.00 (that does not include VAT) the amount that you would list on your expenses would be £50.00], add them all up to get to a sub-total of expenses, add the expenses sub-total to the consultancy fees to come to a second sub-total and then charge VAT at 20% on the second sub-total to come to the grand total billable to the customer. By doing the `netting down’ process and then charging VAT at 20% on the invoice you are effectively charging VAT on any expenses that did not include VAT to begin with and you are also restoring any `netted down’ expenses back to their original costs and this the correct way to do it.

The amount that you can claim as expenses is the actual amount originally incurred when you originally paid for the costs.