Client does not want to pay back dated VAT invoice

[Gulliver]

Hi all,

My accountant suggested me to sign up for flat-scheme VAT. She recommended to back date it as I can "earn" some extra cash. She told me that most companies have no problem with paying the VAT on a back dated an invoice. So I went ahead.

All of my clients are happy to pay the VAT backwards except one. A smaller company. They say they can't do it because of cash flow. I asked them if they could do it just before their VAT return date so that they would not have problem with cash flow. They refused.

My accountant tells me that I can either swallow the loss which is quite substantial for me £1.6K. Or pursue it through small claims court.

When I enquired HMRC about back dated VAT invoices they said that my client is not required to pay the VAT on a back dated invoice and so it's between my and my client.

Accountant did not tell me any cons or risks about back dating VAT. She said it will be fine.

Any advice?

[malvolio]

Hi all,

My accountant suggested me to sign up for flat-scheme VAT. She recommended to back date it as I can "earn" some extra cash. She told me that most companies have no problem with paying the VAT on a back dated an invoice. So I went ahead.

All of my clients are happy to pay the VAT backwards except one. A smaller company. They say they can't do it because of cash flow. I asked them if they could do it just before their VAT return date so that they would not have problem with cash flow. They refused.

My accountant tells me that I can either swallow the loss which is quite substantial for me £1.6K. Or pursue it through small claims court.

When I enquired HMRC about back dated VAT invoices they said that my client is not required to pay the VAT on a back dated invoice and so it's between my and my client.

Any advice?

If the original invoice didn't say "VAT Registration applied for", then you have no case. You can only charge VAT against a VAT invoice and without that qualification or a VAT number it isn't one. If it is, then your client is breaking the law. Or broke.

And AFAIK you can't backdate VAT FRS to before the current accounting quarter.

These are basics. Amazed your accountant doesn't know that.

[Gulliver]

If the original invoice didn't say "VAT Registration applied for", then you have no case. You can only charge VAT against a VAT invoice and without that qualification or a VAT number it isn't one. If it is, then your client is breaking the law. Or broke.

And AFAIK you can't backdate VAT FRS to before the current accounting quarter.

These are basics. Amazed your accountant doesn't know that.

My VAT was back dated to my business start date 2 March 2011. The invoice of course does not say "VAT Registration applied for" because when I issued the invoice I was not yet registering for VAT.

[TheFaQQer]

As Mal says, if you didn't indicate that there would be a VAT invoice at some stage in the future once you had a number, then there isn't much you can do.

Of course, if the client is also VAT registered, you could point out that this is a zero sum game - they pay you the VAT money, then they claim the VAT back, so they aren't losing anything by it.

[Gulliver]

As Mal says, if you didn't indicate that there would be a VAT invoice at some stage in the future once you had a number, then there isn't much you can do.

Of course, if the client is also VAT registered, you could point out that this is a zero sum game - they pay you the VAT money, then they claim the VAT back, so they aren't losing anything by it.

I explained this to the client but they said they will not do it because of cash flow.

[TheFaQQer]

I explained this to the client but they said they will not do it because of cash flow.

Write to the VAT man. Explain the situation clearly, naming the client.

If you write to them, they have to write back to you. If you get a letter from HMRC which says "you must be paid the £1600 from Client A" and show that to the client, you may just force their hand.

[GB9]

Hi all,

Accountant did not tell me any cons or risks about back dating VAT. She said it will be fine.

Any advice?

Get a new accountant.

How has it cost you £1,600.

[BolshieBastard]

If the original invoice didn't say "VAT Registration applied for", then you have no case. You can only charge VAT against a VAT invoice and without that qualification or a VAT number it isn't one. If it is, then your client is breaking the law. Or broke.

And AFAIK you can't backdate VAT FRS to before the current accounting quarter.

These are basics. Amazed your accountant doesn't know that.

When you apply for retrospective VAT registration, you normally state in the date you wish the registration to start. Because your registration is done by those twunts at hmrc, you dont know which quarter you'll fall into.

Last time I did it, they actually backdated mine to the previous quarter.

[Pondlife]

When you apply for retrospective VAT registration, you normally state in the date you wish the registration to start. Because your registration is done by those twunts at hmrc, you dont know which quarter you'll fall into.

Last time I did it, they actually backdated mine to the previous quarter.

The OP is trying to backdate to 2011 as I read it. If a supplier tried to charge me VAT with no prior notice, 2 years down the line I'd tell them to 'do one' as well.

[Jessica@WhiteFieldTax]

Normally having vat only invoices paid causes no issues; I wonder if there is something else behind the scenes here, eg a bad relationship with customer?

Its unusual to go back that far with a voluntary registration.

I think pass this back to your accountant to unwind - they pushed you out there, they can bring you back in.