Reply to: VAT FlatRate payment calculation

[TheFaQQer]

Normal way is to pay on what is invoiced.

There is a scheme (you probably have to apply for it but I haven't checked) where you can pay the VAT when payment is received, not when invoiced. It is designed to help with cashflow for small firms.

You don't have to apply for it, you just need to choose the method that you are going to use.

I do my VAT return based on money received in the quarter, rather than invoice value, as it helps with cash flow. Nothing to do with the registration, it's just the way to operate. But once you do one, then you need to stick with it, so don't go chopping and changing between being cash based to invoice date based.

[Gonzo]

I registered for Flat rate scheme.

I though that VAT should be based on what was invoiced rather than when payment was received. There was no issue with my first return bcos I had already invoiced and paid (was on hols for overlapping period)


css_jay99

Normal way is to pay on what is invoiced.

There is a scheme (you probably have to apply for it but I haven't checked) where you can pay the VAT when payment is received, not when invoiced. It is designed to help with cashflow for small firms.

[css_jay99]

It depends on what method you are using.

You either include all the invoices raised in the period, and do it on that. OR you do it on the cash received in the period.

Depending on what you did in your first return, pretty much dictates what you do in the rest of them. From a cash flow perspective, it's obviously better to do it on the cash accounting method, i.e. when you receive the money rather than when you invoice for it.

HTH.

I registered for Flat rate scheme.

I though that VAT should be based on what was invoiced rather than when payment was received. There was no issue with my first return bcos I had already invoiced and paid (was on hols for overlapping period)


css_jay99

[TheFaQQer]

It depends on what method you are using.

You either include all the invoices raised in the period, and do it on that. OR you do it on the cash received in the period.

Depending on what you did in your first return, pretty much dictates what you do in the rest of them. From a cash flow perspective, it's obviously better to do it on the cash accounting method, i.e. when you receive the money rather than when you invoice for it.

HTH.

[Sockpuppet]

Vat due is based on the date the invoice is raised. So all invoices raised in that period are to be included

Unless you are the cash accounting scheme then you pay vat on this date not the date you receive the cash. So you could in theory bill for £100,000 of work, get paid nothing then owe a lot out in vat before you get paid for any of it.

[KevinS]

VAT is only due on invoices PAID in the 3 month period, AFAIK..

[css_jay99]

Hi again,

VAT for 3 months (up to Nov) is now due.

Damn new contract means I get paid monthly . This means that I would not be raising an invoice till next week for NOV work.

Is it safe to assume that VAT return is only based on invoices raised within the VAT return period (hence exluding my unraised invoice for NOV) ?


cheers

css_jay99

[David Parker ACMA]

1. you can only change vat scheme on the commencement of a vat quarter
2. you are responsible for your VAT, the VAT man will not accept that he hasn't taken the time to contact you.
3. Don't raise any invoices (or credit notes) with VAT on them until you have received confirmation of registration as it is illegal.

send me a personal email if you want to discuss further.

[scooterscot]

Golden rule - do not be late with VAT payments. The Vatman is much more friendly than Hector, but has very sharp teeth. Do not mess with him.

but what if the VAT man has never contacted you by mail or phone since registering?

[r0bly0ns]

So lets say invoice 1 sub total was £100 but I did not have a VAT number - simply put "VAT Number Pending" on the invoice and charge £100 total.

VAT number arrives before I submit invoice 2 which also has a sub total of £100. The total for invoice 2 would be £135.00 (with reference to invoice 1 of course).

Just want to make sure I'm clear - thanks!

I would send the invoice for VAT seperately.

I.e.
Invoice 1 - £100 Vat No Pending
Invoice 2 - £117.50 Inc Vat No
Invoice 3 - £17.50 clearly marked as VAT for invoice 1, attach a copy of your VAT reg certificate.

This makes it easier for you and the client to trace what the payments were for in the future.

[mashetti]

So lets say invoice 1 sub total was £100 but I did not have a VAT number - simply put "VAT Number Pending" on the invoice and charge £100 total.

VAT number arrives before I submit invoice 2 which also has a sub total of £100. The total for invoice 2 would be £135.00 (with reference to invoice 1 of course).

Just want to make sure I'm clear - thanks!

I did a similar thing when I first started, just put VAT Number pending on the Invoice. When I finally got my VAT no. the place I was at wanted a credit of the original invoice and then a new invoice with VAT included. So invoice 1 was £100 VAT pending, then Invoice 2 was £100 credit of Invoice 1, then Invoice 3 was £117.50 (including VAT). So nett is that the Client payed me £17.50. I have heard of people just sending in an Invoice on it's own for the £17.50 but I guess it depends on the Client.

[backlight]

So lets say invoice 1 sub total was £100 but I did not have a VAT number - simply put "VAT Number Pending" on the invoice and charge £100 total.

VAT number arrives before I submit invoice 2 which also has a sub total of £100. The total for invoice 2 would be £135.00 (with reference to invoice 1 of course).

Just want to make sure I'm clear - thanks!

[TheFaQQer]

Another question in relation to VAT but a bit off topic.

I am about to submit my first invoice under my limited company, but I have not received my VAT registration as of yet. My plan was to invoice without VAT until I received my VAT registration number, then send a credit note to the client for all past invoices raised without VAT, and then re-invoice everything with VAT.

Any reason why this will not work?

Invoice with "VAT Number Pending" on your current invoice. When the number comes through, invoice for the rest. No need to have a credit note or anything like that. But make sure you put the "VAT number pending" on the original invoices.

[backlight]

Another question in relation to VAT but a bit off topic.

I am about to submit my first invoice under my limited company, but I have not received my VAT registration as of yet. My plan was to invoice without VAT until I received my VAT registration number, then send a credit note to the client for all past invoices raised without VAT, and then re-invoice everything with VAT.

Any reason why this will not work?

[MikeC1408]

not sure i follow your calculations


oK,

i gave the HMRC guys a call today and was told that application for FRS is accepted and I can use it for my first return, but they will also send out a confirmation letter for this.

Ok so I dont get things mixed up now that FRS has been approved.

I HAD charged my clients 17.5% VAT on all services for the VAT return period.

Questions:

1) Is that (i.e 17.5%) What I am supposed to be charging ?
2) Assuming that services = £100,000 & 17.5% VAT = 17500
Beign 1st yr, does this mean i then pass £117,500 * 12% = £14100 to VAT man ?
hence i get to keep 17500-14100 = £3400 ?
3)Like the corp tax return, are all figures rounded up to the £ ?



cheers
Carlton

No. 2 is correct assuming that 13% is the Flat Rate for your profession.