Reply to: Invoice dates and VAT returns etc

[Greg@CapitalCity]

Yeh. But my accountant just goes off on his own and does what he wants and doesnt even bother to discuss the options with me. 30 days notice to leave on its way soon.

Sounds like you have made the right choice then.

[psychocandy]

There are lots of caveats and exceptions to the tax point date rules that relate to VAT. However, for a contractor who provides professional services on an ongoing basis, and bill regularly, the rules are pretty simple - there is a tax point every time you;
(1) issue a VAT invoice; or
(2) receive a payment, whichever happens first.

If your accountant does not operate a cash based system when calculating your VAT return, then get them to change. Its much better for your cashflow, and makes the calculation of each VAT return very easy to follow.

Yeh. But my accountant just goes off on his own and does what he wants and doesnt even bother to discuss the options with me. 30 days notice to leave on its way soon.

[Greg@CapitalCity]

Continuous supplies

There are lots of caveats and exceptions to the tax point date rules that relate to VAT. However, for a contractor who provides professional services on an ongoing basis, and bill regularly, the rules are pretty simple - there is a tax point every time you;
(1) issue a VAT invoice; or
(2) receive a payment, whichever happens first.

If your accountant does not operate a cash based system when calculating your VAT return, then get them to change. Its much better for your cashflow, and makes the calculation of each VAT return very easy to follow.

[psychocandy]

The date you raised the invoice.

Which I could do on 31st or 1st of month. Agency wont care either way but it makes a difference possibly as to what quarters return the VAT goes it?

[SueEllen]

Hmm. Contract states I must provide timesheet and invoice by Wednesday of week following end of period (i.e. calendar month).

So, Whats the tax point in this instance?

The date you raised the invoice.

[psychocandy]

The taxpoint isn't totally up to you.

In your case it's what you agreed with the agency/client.

If the agency/client says you are to invoice on 1st month then that's the taxpoint. You need to invoice them within 14 days of that taxpoint.

Both the taxpoint and the date the invoice was issued should be on the invoice.

Hmm. Contract states I must provide timesheet and invoice by Wednesday of week following end of period (i.e. calendar month).

So, Whats the tax point in this instance?

[SueEllen]

Yeh. Think I understand that now. But its nothing to do with tax point and what date to take interest rates from, is it?

Correct.


Seriously get in touch with the VAT people.

Don't explain or admit you have done anything wrong but ask carefully crafted questions.

[psychocandy]

Taxpoint doesn't move at all.

The point of the cash accounting schemes is that if you are in the habit of having late or non-paying customers then it eases cash flow. It also stops HMRC from having to give you refunds.



Seen it.

Yeh. Think I understand that now. But its nothing to do with tax point and what date to take interest rates from, is it?

[SueEllen]

So does taxpoint move if your using cash accounting or is it still invoice date?

Taxpoint doesn't move at all.

The point of the cash accounting schemes is that if you are in the habit of having late or non-paying customers then it eases cash flow. It also stops HMRC from having to give you refunds.

See my other thread re: exchange rates and dates etc and reply from my accountant.

Seen it.

[psychocandy]

Yes.

Taxpoint can be different from invoice date.

For example if I was a building supplier and you came in on the 8th May to get some supplies which I was to charge to your account. The taxpoint would be the 8th May even if I invoiced you on the 21st May to settle your account.

However if I was a client and wanted an IT contractor to do something for me. I agreed with the IT contractor that they should submit invoices monthly on the 1st of the month even though the project would take a year to finish. If you invoiced me on the 1st of the month both the taxpoint and the invoice date would be the 1st of the month.

In regards to paying VAT the taxpoint would determine when I would need to pay VAT to HMRC. If I was using a cash accounting scheme obviously I would only need to hand over the VAT I collected in that period regardless of the taxpoint.

So does taxpoint move if your using cash accounting or is it still invoice date?

See my other thread re: exchange rates and dates etc and reply from my accountant.

[SueEllen]

Thanks for the explanation.

In my case, I invoice and send timesheets at the end of the month. So tax point would be the date on the invoice? Like I said it could be 31st June or 1st July or is that totally up to me?

The taxpoint isn't totally up to you.

In your case it's what you agreed with the agency/client.

If the agency/client says you are to invoice on 1st month then that's the taxpoint. You need to invoice them within 14 days of that taxpoint.

Both the taxpoint and the date the invoice was issued should be on the invoice.

[psychocandy]

Yes.

Taxpoint can be different from invoice date.

For example if I was a building supplier and you came in on the 8th May to get some supplies which I was to charge to your account. The taxpoint would be the 8th May even if I invoiced you on the 21st May to settle your account.

However if I was a client and wanted an IT contractor to do something for me. I agreed with the IT contractor that they should submit invoices monthly on the 1st of the month even though the project would take a year to finish. If you invoiced me on the 1st of the month both the taxpoint and the invoice date would be the 1st of the month.

In regards to paying VAT the taxpoint would determine when I would need to pay VAT to HMRC. If I was using a cash accounting scheme obviously I would only need to hand over the VAT I collected in that period regardless of the taxpoint.

Thanks for the explanation.

In my case, I invoice and send timesheets at the end of the month. So tax point would be the date on the invoice? Like I said it could be 31st June or 1st July or is that totally up to me?

[SueEllen]

What about this?
HM Revenue & Customs: When transactions take place for VAT purposes

"Time of supply for goods and services

The time of supply (tax point) for VAT purposes is defined as follows:

<clip>

* For transactions where there is a VAT invoice - the time of supply is normally the date of the invoice, even if this is before or after the date the supply physically took place (as defined below).

However, see the exceptions detailed below.

Date the supply physically takes place

<clip>

For services, the date when the services are considered to be supplied for VAT purposes is the date when the service is carried out and all the work - except invoicing - is finished. "

Does this infer that services provided completely during June, even if invoiced on 1st July, are deemed to have a tax point in June? (if you dont use cash accounting system that is)

Yes.

Taxpoint can be different from invoice date.

For example if I was a building supplier and you came in on the 8th May to get some supplies which I was to charge to your account. The taxpoint would be the 8th May even if I invoiced you on the 21st May to settle your account.

However if I was a client and wanted an IT contractor to do something for me. I agreed with the IT contractor that they should submit invoices monthly on the 1st of the month even though the project would take a year to finish. If you invoiced me on the 1st of the month both the taxpoint and the invoice date would be the 1st of the month.

In regards to paying VAT the taxpoint would determine when I would need to pay VAT to HMRC. If I was using a cash accounting scheme obviously I would only need to hand over the VAT I collected in that period regardless of the taxpoint.

[psychocandy]

psychocandy if your accountant really confuses you about VAT and the good people on here still confuse you then you can:
1. Phone up the VAT helpline and get them to explain a few things to you.
2. Arrange to go on a VAT workshop which takes about 2 hours.

Yeh. Might be a plan. Having Foreign payments certainly seems to confuse issues.

[SueEllen]

psychocandy if your accountant really confuses you about VAT and the good people on here still confuse you then you can:
1. Phone up the VAT helpline and get them to explain a few things to you.
2. Arrange to go on a VAT workshop which takes about 2 hours.