Agency taking time to pay VAT

[vetran]

Keep everyone informed

Talk to VAT man, they will help, maybe even point you to relevant documents you can pass onto the agent.

Write a letter to the Agency explaining your Registration is pending. Put Vat registratration pending on the invoices. Once registered re-issue any invoices that require vat with Vat element & number added. If you are cash accounting pay VAT on money eligible, await payment for the rest. OK you end up out of pocket for a while but thats better than upsetting teh vat man, youre earning £60K so you can afford it.

The agent won't pay VAT until they have a VAT invoice, you can't issue it until you are registered. If you exceeded the threshold or there is a delay in registration you can re-issue invoices once registered.

Talk to their accounts department and explain that you need paying the backdated VAT element fast, they may well work with you, they don't want you telling the VAT man they are witholding VAT they know is due.

IANAE, this is just what the nice VAT lady told me.

[NotAllThere]

On your VAT registration form you specify when you want to start charging VAT. If your annual turnover will exceed the VAT threshold, this should be before your first invoice. You can't charge VAT, however, until you're registered.

You instead issue an invoice WITHOUT VAT, but with the words "VAT registration in process", or suchlike.

When your registration comes through, re-invoice all those invoices on or after the registration date, this time requesting the VAT. In the dim and distant pass, I just created a new invoice for just the VAT amount. C&E and the agency were both quite happy with that, but I believe that re-invoicing is the correct way to handle it.

[TheFaQQer]

My accountant has advised that I still submit invoices with VAT on them and just put on them (next to the heading VAT Number) "Registration being processed". From the sounds of your reply, this is the way to go - after all, the worst they can do is to refuse to pay the VAT until I give them the number and then pay me all the VAT owed once I give them the number.

Nope - the worst they can do is to ring the VAT man and tell him that you're charging VAT when not registered, leading to you going to jail for tax fraud for charging VAT when not registered.

If you charge VAT from (e.g.) January 1st to March 1st, and the VAT registration is only from February 20th, then you've just committed tax fraud.

[MikeC1408]

This is a question I've had...

I'm just about to start my first contract, got the ltd co. off the ground went to the HMRC website and downloaded the VAT1 form, sent it in the first week of jan (hoping to get registered by the time I submit my first invoice at the end of feb). I had it returned to me last week saying it was an old version (only 2 years out of date!), and would I mind filling in the new form. Filled in and sent back... but it is doubtful that I will get my VAT registration number back in time.

My accountant has advised that I still submit invoices with VAT on them and just put on them (next to the heading VAT Number) "Registration being processed". From the sounds of your reply, this is the way to go - after all, the worst they can do is to refuse to pay the VAT until I give them the number and then pay me all the VAT owed once I give them the number.

That's not what I was getting at.

Invoice says 'VAT Registration Pending' but does not include VAT. When registered submit a VAT only invoice.

Only charge VAT once registered.

[PAH]

Unlikely - it's not you that's owed the money. It's the VAT man - if they don't get the money, they will send the boys round.

I was thinking for all invoices issued by the company.

I'm not convinced HMRC wouldn't just harrass us rather than our debtors. It's too easy for them to resist. They'd probably just look at the total amount received during the vat period and expect their cut regardless.

[TheFaQQer]

That's what I've done in the past when setting up new companies for contracting through, issue a VAT invoice once the VAT details come through.


I wonder if there's the possibility to add a clause to the bottom of invoices saying late payment will incur interest, accruing on a daily basis? Should be feasible I think, if using a reasonable interest rate, and the contract states the payment terms the agency should adhere to.

Unlikely - it's not you that's owed the money. It's the VAT man - if they don't get the money, they will send the boys round.

[r0bly0ns]

That's what I've done in the past when setting up new companies for contracting through, issue a VAT invoice once the VAT details come through.


I wonder if there's the possibility to add a clause to the bottom of invoices saying late payment will incur interest, accruing on a daily basis? Should be feasible I think, if using a reasonable interest rate, and the contract states the payment terms the agency should adhere to.

http://www.payontime.co.uk/ has all the details about this

[PAH]

Yes - that's right. Until you get the VAT certificate with a date on it, you don't know whether you should be charging it or not.

Invoice ex-VAT but "VAT registration pending" on the invoice. Then when the certificate comes through, invoice them JUST for the VAT. If they fail to pay, then talk to the VAT helpline - it's their money after all.

If you charge VAT without being registered, that's tax fraud.

That's what I've done in the past when setting up new companies for contracting through, issue a VAT invoice once the VAT details come through.


I wonder if there's the possibility to add a clause to the bottom of invoices saying late payment will incur interest, accruing on a daily basis? Should be feasible I think, if using a reasonable interest rate, and the contract states the payment terms the agency should adhere to.

[TheFaQQer]

That goes against the advice I was given by my accountant, which was "DO NOT CHARGE VAT UNTIL YOU ARE REGISTERED - IT IS AGAINST THE LAW!"


What I was told to do was invoice without VAT, and if the VAT office back dates your registration, submit VAT only invoices for all sales invoices that had been sent out, attaching a copy of the registration certificate.
Which is exactly what happened and our clients paid up no problems.

Yes - that's right. Until you get the VAT certificate with a date on it, you don't know whether you should be charging it or not.

Invoice ex-VAT but "VAT registration pending" on the invoice. Then when the certificate comes through, invoice them JUST for the VAT. If they fail to pay, then talk to the VAT helpline - it's their money after all.

If you charge VAT without being registered, that's tax fraud.

[r0bly0ns]

That goes against the advice I was given by my accountant, which was "DO NOT CHARGE VAT UNTIL YOU ARE REGISTERED - IT IS AGAINST THE LAW!"


What I was told to do was invoice without VAT, and if the VAT office back dates your registration, submit VAT only invoices for all sales invoices that had been sent out, attaching a copy of the registration certificate.
Which is exactly what happened and our clients paid up no problems.

[aikidoka]

Have you sent them a VAT invoice?

Did you first invoices state 'VAT Registration Pending' or something similiar?

This is a question I've had...

I'm just about to start my first contract, got the ltd co. off the ground went to the HMRC website and downloaded the VAT1 form, sent it in the first week of jan (hoping to get registered by the time I submit my first invoice at the end of feb). I had it returned to me last week saying it was an old version (only 2 years out of date!), and would I mind filling in the new form. Filled in and sent back... but it is doubtful that I will get my VAT registration number back in time.

My accountant has advised that I still submit invoices with VAT on them and just put on them (next to the heading VAT Number) "Registration being processed". From the sounds of your reply, this is the way to go - after all, the worst they can do is to refuse to pay the VAT until I give them the number and then pay me all the VAT owed once I give them the number.

[Kowalski]

No I never sent them a VAT invoice even though I have constantly asked the agency if they require this each time I contact them and they have said no. I am going to send them one this evening.

Spoke to the VAT Helpline, basically I have changed agency's now so this will be a one off. The VAT people said do my return as normal at the end of this month and let them know if I still haven't been paid (luckily I have enough to cover the VAT) and the VAT people will get their debt recovery people onto it if it needs to go any further.

Thanks for the help.

[Ardesco]

Phone the VAT help line and ask them what they suggest. I'm sure that they'll be interested....

[MikeC1408]

Have you sent them a VAT invoice?

Did you first invoices state 'VAT Registration Pending' or something similiar?

[Kowalski]

Been ltd for about 4 months, first contract I never invoiced the agency for VAT as I wasn't VAT registered at the time. I am now VAT registered from day one so I need to claim the VAT back on my first contract.

I asked my agency first in December then Janaury and several times since then, each time they say they will look into it and get back to me.

I will need to pay the VAT man by the end of this month, any way I can make the agency get their finger out?