Reply to: Self Billing in Contract

[fidot]

Why would you assume this? I've always used accruals basis. It's the default as far as I'm aware.

Accruals may be the default, but cash accounting provides the least risk approach and best cash flow for contractor companies

[Sam B Dynamo Accounts]

That's exactly what he means.

Jinx!

[Sam B Dynamo Accounts]

I'm not entirely sure what he means by 'tax point as per your customer's tax point'. Presumably he just means with the same date and details as is on their invoice.

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Yes that's exactly what he means

[TheCyclingProgrammer]

I'm not entirely sure what he means by 'tax point as per your customer's tax point'. Presumably he just means with the same date and details as is on their invoice.

That's exactly what he means.

[TheCyclingProgrammer]

... but surely, you are using cash accounting?

Why would you assume this? I've always used accruals basis. It's the default as far as I'm aware.

[fidot]

... but surely, you are using cash accounting?

In which case, the date on the VAT invoice isn't relevant.

[cloudcontractor]

Makes sense, my accountant replied with the following:

In terms of self-billing invoices in XERO, as you say, you won’t be issuing your own invoices, but rather adding the self-billing invoices you receive from the customer to XERO to match off against the transactions as they clear your bank account. Be careful to raise the tax point as per your customer’s tax point to ensure any VAT is accounted for in the correct period once registered.

I'm not entirely sure what he means by 'tax point as per your customer's tax point'. Presumably he just means with the same date and details as is on their invoice.

It feels slightly clunky but since I'm not dealing in thousands of invoices across the course of the year there won't be much opportunity for my accountant to get confused, and I'm attaching the pdf of their self-bill invoice to the invoice record in Xero so it'll all be evident.

[TheCyclingProgrammer]

I've actually asked my accountant about this and I'm awaiting the reply on how to properly record self-bill invoices (using Xero in my case). I've been warned not to create my own invoice as this would represent a duplicate tax point.

I don't know about Xero but in FreeAgent, the standard recommended way to correctly record sales on an accruals basis (and for VAT purposes if on accrual VAT accounting) is to create an invoice in the system. An exact duplicate record of the information on your self-billed invoice is not going to create a duplicate tax point because the invoice never gets sent. Think of it as nothing more than an implementation detail of how you record the sale in your books.

Unless Xero has support for logging self-billed invoices, you'll likely find the process is the same.

You *might* be able to work around it by journalling the appropriate sales/creditor accounts but you'd also have to correct journal the VAT and there's a good chance you'll mess it up - just create the dummy invoice. Nobody is ever going to know about it. If HMRC ask to see your records, you give them the self-billing invoice.

[LondonManc]

I've actually asked my accountant about this and I'm awaiting the reply on how to properly record self-bill invoices (using Xero in my case). I've been warned not to create my own invoice as this would represent a duplicate tax point:

https://www.gov.uk/guidance/self-bil...illed-supplies

Obviously I need some kind of 'construct' within my accounting system to deal with the customer-raised bill, but don't wish to foul up my official record in any manner that could leave me exposed. Searching around it seems like these flashy online accounting packages don't have an official solution for it as the advice I'm seeing is all workarounds.

Ah, so there are merits to the Dolan-Excel model after all?

[cloudcontractor]

I've actually asked my accountant about this and I'm awaiting the reply on how to properly record self-bill invoices (using Xero in my case). I've been warned not to create my own invoice as this would represent a duplicate tax point:

https://www.gov.uk/guidance/self-bil...illed-supplies

Obviously I need some kind of 'construct' within my accounting system to deal with the customer-raised bill, but don't wish to foul up my official record in any manner that could leave me exposed. Searching around it seems like these flashy online accounting packages don't have an official solution for it as the advice I'm seeing is all workarounds.

[LondonManc]

I know better and ain't falling for that one you little tinker. A search might have been in order but Mal beat me to it



Very true but you'd think their incompetence would stop short of giving their hard earned money away.

As long as the agent gets his cut, he's not bothered about the agency itself.

[northernladuk]

Depends, are you going to see if I've asked my accountant?

I know better and ain't falling for that one you little tinker. A search might have been in order but Mal beat me to it

In all the realms of possibilities, I didn't even think they would need to protect against being so stupid they pay the same invoice twice, then I remembered we are dealing with agents!

Very true but you'd think their incompetence would stop short of giving their hard earned money away.

[TheCyclingProgrammer]

The "Not to raise sales invoices for the transactions covered by this agreement" has me wary, I use Freeagent so it creates an invoice for me. Might have to have a word with the pimp as to why they have added this.

Raising an invoice = creating an invoice and sending it.

Creating a dummy invoice in FreeAgent to correctly account for sales and not sending it - none of the agent's business.

[SimonMac]

You put that in just to get a rise from me?

Depends, are you going to see if I've asked my accountant?

Nothing to worry about. It means against the agent. They are probably so incompetent if you send one in they'd pay it so they are asking you not to. You raising them in Freeagent is just to keep your books right, nothing to do with payment and the contract.

In all the realms of possibilities, I didn't even think they would need to protect against being so stupid they pay the same invoice twice, then I remembered we are dealing with agents!

[SimonMac]

Been answered before. Keep your own invoicing system just don't send a copy to the agency, and treat their invoice (which it isn't, but hey...) as a remittance advice.

And always check the two match.

That is what I have been doing, and will continue to do so, just struck me as curious that they make this an explicit clause in my contract.